Intro
Imagine that you were unable to provide legal services to your clients or earn money for an entire year. How would your life change? How would you replace your income if you got too sick or injured to work? Some people have enough money saved away to sustain themselves through long periods without an income – but what if you didn’t? In the United States, living paycheck to paycheck is the most prevalent financial lifestyle, with a rising number of even high-income individuals living this way. According to the 2022 LendingClub report, 61% of Americans live paycheck to paycheck, the report also found that even the highest paid workers are having trouble making ends meet
Why does every lawyer need disability insurance?
To answer this question, let's start by defining what disability insurance or income insurance as we like to call it at Asteya, is a policy that supplements your income in the event you’re unable to work due to illness or injury – you can think of it as your financial safety net. Disability insurance is often time overlooked because people either are unaware that it exists or have the wrong idea behind what it actually is.
Many professionals don't think disability insurance is important because they think it covers the same kinds of injuries that can happen on a construction site or factory floor. Little do they know that most disabilities are actually caused by health problems.
In fact, according to a study, cancer, heart disease, and arthritis cause 90% of long-term disabilities. The same study reveals that 95% of accidents and illnesses that can get in the way of your work are not actually caused by the job itself.
It takes a long time, extensive study, and a lot of money to study and become a lawyer. Not to mention how hard it is to get into law school, take the LSAT, make it through law school, and pass the bar exam.
Whether you assist people in receiving the compensation they deserve, draft wills and trusts, represent corporate clients, or work in the criminal justice system, let’s just say your knowledge and skills are greatly needed; and hopefully, well paid for.
You've put a lot of time and effort into your studies and your practice, and it came out really rewarding in the end. But have you ever thought of the possibility that something might put a halt to your practice and your work? What if a sudden illness or injury makes it hard or impossible for you to practice law for a while? And let’s be honest, you can’t just drop everything and move to another profession to make ends meet.
You get used to the lifestyle that you built from the ground up. This same lifestyle could put you at high risk if you can't work for months or years due to a disability.
Any time you’re unable to practice law means you’ll be draining your savings, missing bills, and leaving your student debts up in the air.
“I have an emergency savings account that I can rely on, I don't need disability insurance"
Even if you have enough savings to provide you with a safety net when the unexpected happens, disabilities are unpredictable and can happen anytime, anywhere, not to mention, they can last for weeks, months, or even years. Even if you have enough money saved to cover you for 6 months, your inability to work could extend beyond that – then what? There are also no restrictions with what you can spend your disability benefit on, which means that you could use it to pay for medical bills, deal with any other unexpected expenses, or simply to just pay your grocery bills.
“I can get benefits from SSDI, I don’t need additional coverage”
For some people that become disabled, they can get Social Security Disability Insurance (SSDI) benefits from the Social Security Administration (SSA). However, disability benefits from Social Security are insufficient. The payouts can be small and limited.
As of 2021, the average monthly payment received by people with a disability through social security benefits is approximately $1,280 per month, or $320 per week, which is usually not enough to meet basic living costs, let alone retirement and other long-term goals. Having a supplemental disability insurance policy can be the best way to protect your income sufficiently as it typically covers 60-80% of your income as a lawyer.
"Disability Insurance is super expensive, I’m not sure I can afford it”
Protecting your income shouldn’t be a luxury, so here at Asteya, we’ve created affordable and easy solutions that won’t drain what you’re trying to protect (your income!). We offer disability insurance (or disability income insurance as we like to call it) that’s simple, fast, and affordable. Our 100% digital process means we don’t tire you out with proof of income, medical exams, phone interviews, or wait times, so you can go from applicant to insured in no time. Our prices start as low as:
Permanent Disability Income Insurance: starting at $6.05/month
Sickness & Injury Disability Income Insurance: starting at $5/month
How much disability insurance do lawyers need?
Depending on where you live, the type of law you practice, and the size of the firm or company you work for, a typical lawyer can earn as little as $50,000 per year or as much as $180,000 per year.
The law firm you work for will usually offer group disability coverage to you, and it's a good idea to take advantage of the firm's group benefits, but sometimes group disability insurance isn't enough. For the highest earners in a law firm, the coverage provided by the company's group disability benefit plan is likely to fall short of what they really need to protect their income.
Most group disability insurance policies don't cover your annual or special bonuses, which is a problem in an industry like yours where bonuses can make up 20% or more of your total pay. Since the company pays for these benefits with money has already been taxed, the disability money you receive is also taxable.
If you were to become disabled, how much of your salary would be replaced would be shown in the Total Compensation Replaced column: it's close to 60% for a first-year associate, but rapidly declines after that. Replacement income for a midlevel associate is in the mid-40% range, while for a senior associate it is in the mid-30% range.
That's why supplemental disability insurance can be such an important part of a successful lawyer's good financial planning. When deciding about long-term disability insurance, lawyers have to think carefully about how a disability will affect their finances in the long run. Instead of just relying on group disability coverage, law firms and individual lawyers should often set up individual disability insurance for partners and the most important lawyers in the firm.
How much does disability insurance for lawyers cost?
The cost of attorneys’ disability insurance is based on the following criteria used by insurance companies:
- Your age and health; In general, premiums are more affordable for younger, healthier individuals.
- Your income: When an injury or illness prevents you from practicing law, disability insurance can help replace a portion of your salary.
- Where you live.
- The type of law you practice and where you work.
According to the Bureau of Labor Statistics' Occupational Outlook Handbook, the national average annual wage for a lawyer is $144,230. This is roughly three times the annual salary in the United States ($51,960). Depending on your state and your location you would pay a monthly price ranging from 20 to 50$ a month for your disability benefit.
So, to know how much your premium policy might cost for you, you’ll need to keep in mind how your money flows each month: calculate your monthly expenses and the amount of money you make from other sources other than your employer. This way you’ll be able to calculate how much you’ll need in disability benefits. Remember that it will be easier to pay premiums while you are healthy and working if the monthly benefit you can live with is lower.
How to apply for disability insurance as a lawyer?
Lawyers are generally classified as having the highest occupational rating, implying that there is less risk of lawyers filing disability claims. It also means that you, as a lawyer, will generally be paid less than other professions.
Even if you have a lower risk of developing a job-related disability than other occupations, you still run the risk of being unable to work due to an injury or illness. According to the Council for Disability Awareness, illness causes 90% of disabilities.
So, as a lawyer, there are two things you should look for in a disability insurance policy.
First and foremost, you should make sure that any coverage you purchase is both guaranteed renewable and cannot be canceled. So long as you keep paying your premium, the insurance company is bound by the terms of your policy and cannot cancel it or alter its conditions in any way.
Nothing beats the satisfaction of paying the premium of a 20-year-old when you're in your fifties, so this is especially significant if you're buying the coverage when you're young and healthy.
Asteya’s disability policy is the right fit for you. It’s quick, easy, and totally online.
At Asteya, applying for disability insurance as a lawyers is incredibly simple. The application is completely digital so there’s no need for medical exams, blood tests, phone calls or lengthy paper applications. Asteya's underwriting occurs in real-time which means you can obtain a policy in 30 minutes or less!
What are the typical extras that lawyers need to add to their insurance?
American Bar Endowment Plan:
For this coverage, provided by NY Life, you must be a full-time employee, under the age of 65, and a member of the American Bar Association who resides in the United States (excluding New Hampshire, Nevada, Ohio, or Vermont). It only covers up to $12,000 per month, though, and it may not pay as much for partial or residual disability as an individual plan does. Also, it's a group policy, which means it could be canceled (unlikely) or switched to a different provider. It also wouldn't let you switch careers later in life if you wanted to, since you have to be an ABA member to stay covered.
Guaranteed Standard Issue (GSI) Plan:
Group disability insurance is a necessity for many companies, but a basic policy may not be customized enough to meet the needs of the individual. In order to provide all of its workers with enough disability insurance to restore 60% of their pay, the corporation will likely require a mix of approaches. Guaranteed standard issue disability insurance is a cost-effective way for companies to provide their highest earners with the protection they need from a disability.
Own Occupation Insurance:
Own occupation insurance is more expensive than other policies, but it is worth it to provide you with the most income protection coverage. You will not be required to work, but you will not be prevented from doing so if there is something you want to do that is compatible with your current health situation.
The bottom line
No matter your occupation or your background, disability insurance is an important policy to consider. The peace of mind that comes with having your income protected is knowing that you and/or your family's living expenses will be covered no matter what happens to you.
If you're still on the fence about whether disability income insurance is for you (hint: it is), here are a few extra points to consider while thinking about it:
- Asteya’s policy is a no brainer, seeing that it is 100% digital. We don't require blood tests or doctor's appointments, unlike other insurers. We'll just ask you a few questions to determine your best policy.
- You’ll be all set once your policy is in place! You'll pay your premiums quarterly, monthly, or annually for the duration of your policy.
- If the unexpected happens and you need to file a claim, our team will be there to assist you in receiving the funds you require as soon as possible. When your claim is approved, you'll receive a payout that you can put toward whatever you need, such as bills, groceries, or medical expenditures.