What single moms should know about disability insurance

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.

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.”

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.

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.

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.