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What single moms should know about disability insurance

Being a single parent can feel like a high wire act, but you don’t have to work without a net.

Being a single parent can sometimes feel like walking a tightrope without a net. That might be because being a single parent really is like walking a tightrope without a net. Taking on the role of parent, counselor, teacher, chef, chauffeur, and everything else is hard enough on its own. But when you’re also the sole breadwinner? It truly is a high wire act.

Not having financial backup in case an injury or illness disrupts your income can be a stressful situation. Unfortunately, that’s the reality for a majority of American women. According to research by the Council for Disability Awareness, 52% of single working women aged 20 to 65 have no disability income insurance at all, and almost one in three said they’re “extremely” unprepared for a disability that lasts three months. That leaves about 10 million American women in serious financial jeopardy if they temporarily lose their incomes.

In this article:

Why are so many single women underinsured?

The problem isn’t surprising according to Emma Johnson, a long-time financial journalist and founder of Wealthy Single Mommy, which helps single mothers navigate their careers and finances. “Americans overall are underprepared for the financial fallout of a disability — and single women even more so. The paradox is that while single women — single moms especially — can benefit from disability insurance more than others, they are less likely to have it.“

Carol Harnett, President of the Council for Disability Awareness, agrees. “We’ve always known that women had higher rates of disability throughout their working careers than men, excluding pregnancy. But we were surprised to see how few single women have disability insurance or other forms of income protection, or thought to get it.”

To Johnson, the reasons are understandable. “Disability insurance costs money, and/or is a benefit of full-time employment, both of which are harder to come by when you are parenting solo. The chances of needing disability insurance are greater than needing life insurance — yet fewer people have this coverage.“

The numbers back her up. According to the Social Security Administration, 25% of today’s 20-year-olds will become disabled before reaching retirement age, and 13% will die before reaching retirement. While there’s clearly a silver lining in those statistics — we’d also much rather not die —it does mean you may want to consider moving disability insurance up your list of priorities.

Life insurance is top of mind for many parents, and maybe even more so for single parents making a financial plan, since the need to provide for your child in case you’re not around is obvious. That’s a good idea, but Johnson recommends adding disability insurance to the mix as well – if only for the added peace of mind.

“Disability insurance can help protect your family in case you are unable to work. Even if you never need it, the peace of mind it provides frees up energy you can use to grow other parts of your life: career, family time, health, relationships.”

“The chances of needing disability insurance are greater than needing life insurance — yet fewer people have this coverage.”

—Emma Johnson, founder of Wealthy Single Mommy

Harnett puts it in even stronger terms, saying “If you’re a single woman and don’t have disability insurance through your employer or private insurance, you need to put an income protection plan in place.”

Timing is everything

Insurance isn’t usually the most exciting purchase in the world (although we’re working on it). With a million things to buy and bills to pay on a limited budget, disability insurance can get pushed to the back burner. We get it.

But now matter how careful you are, things happen, and illnesses and injuries rarely wait until you’re ready for them. One of the most common questions we get from prospective customers is whether Haven Disability will provide benefits if someone misses work because of an illness or upcoming surgery. While in many cases the answer would have been yes, it’s unfortunately too late by that point. You’ll need to have coverage in place beforehand.

“If you’re a single woman and don’t have disability insurance through your employer or private insurance, you need to put an income protection plan in place.”

—Carol Harnett, President of the Council for Disability Awareness

How much disability insurance do single parents need?

This won’t be the same for everyone, so it really depends on your situation. In general, most short term disability insurance policies will replace around 60% of your income. For some, that will be enough to cover the basic necessities, like rent and car payments, groceries, and utilities. For others, the idea of taking a 40% pay cut may be a harrowing prospect.

The good news is that if you purchase individual disability insurance with after-tax money (such as Haven Disability), the disability benefits you receive won’t be subject to income taxes. That means a monthly benefit of 60% may come closer to your current take-home pay than you might expect.

Disability insurance is more affordable than you might think

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If you have disability coverage through your employer, the disability benefits you receive will likely be subject to income taxes. If the coverage amount is 60% of your income, you may be feeling the pinch even more after the taxes are withheld.

Johnson recommends reading your policy details carefully and supplementing your coverage if needed. “Even if your employer offers disability insurance, you may want to read the fine print to understand if it makes sense to buy more to help meet your basic living expenses in the event of an injury or illness.”

How much does disability insurance cost?

There isn’t a one-size-fits-all answer to how much disability insurance costs. The rule of thumb for both short and long term disability insurance is between 1-3% of your salary, but the actual amount you’ll pay for disability coverage will vary according to your age, occupation, health status, and the policy options you select.

With Haven Disability, you can choose a monthly benefit from $500-$5,000/mo, with a maximum of 60% of your gross income. The higher the monthly benefit, the more you’ll receive each month if your disability claim is approved, but the price goes up as well. If the budget is tight, you may want to consider choosing just enough to cover your essential expenses.

Time is one resource most single parents just don’t have, so we’ve made it as quick and easy as possible to see how much disability coverage will cost. You can get a disability insurance quote in 7 questions, then adjust the options to fine tune the coverage for your needs and budget.

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About Sarah Fitzgerald

Read more by Sarah Fitzgerald

Our editorial policy

Haven Disability is a Short Term Disability Insurance Policy (ICC20-HLSTDI-POL) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in Arkansas is 100139527. Refer to important information about this policy’s exclusions and limitations. For costs and complete details of coverage contact (855) 950-1395 or visit us online at https://disability.havenlife.com.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus.html

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