AOF Financial Planning

AOF Financial Planning

Lesson 12Health and Disability Insurance

Student Resource 12.5

Reading: Disability Insurance—One Person’s Story

This is the story of Rachel Markowitz, a vibrant, healthy 28-year-old. She works as a financial analyst at a big bank in Chicago. She likes her work, especially her paycheck! With it, she’s been able to rent a nice apartment and buy her favorite car. But what she really looks forward to is rock climbing. It is her passion. In the wintertime, when it is too cold and windy to climb real rocks, she and her boyfriend Malcolm love to go a local gym on the weekends, where there is a huge and challenging climbing wall.

On the day our story begins, a Saturday morning, Rachel is getting ready to go to her favorite climbing wall. She is planning on meeting her boyfriend there. It is a miserable Chicago winter morning, with a combination of wind, freezing rain, and fog, so she puts on her heavy coat. She hates this weather. Luckily, her car, a new Honda CR-V, handles well in this type of weather.

As she’s driving on the highway, she has to peer through her windshield carefully. Trucks are throwing huge sprays of dirty water on her car, and it is hard to see. This weather makes her nervous. Suddenly, a red car swerves in front of her to avoid a tire in the road. Rachel tries to stop before hitting the car, but her car just slides in the rain and begins spinning. Rachel frantically tries to straighten the car, but she slams into the guardrail and the last thing she hears before she blacks out is another car hitting her.

When she regains consciousness, she is lying in an ambulance, with a tube in her nose and another in her arm. She tries to sit up, but she can hardly move without feeling a terrible pain in her back. Poor Rachel ends up having two operations on her back and spends six weeks in the hospital. Rachel hates hospitals, especially the food, but she is grateful that her health insurance is paying the bills. She also calls her auto insurance agent, who quickly handles the paperwork to help her buy a new car. Rachel is grateful that she had the forethought to sign up for good insurance coverage.

On her last day in the hospital, the doctor tells her some bad news. She will have to stay home from work for three months, and stay in bed for most of that time to allow her back to heal. And no rock climbing for six months! “Oh no! Six months of no climbing,” she says, “that’s terrible!” Suddenly another terrible thought hits her. She can’t afford to be out of work for three months.

She has too little money in the bank to pay rent, buy food, and pay the high winter heating bills for three months. She worries she’ll be out on the street, or worse, moving back to her parents’ house!

Her first day home she lies in bed, sipping a bowl of soup her boyfriend made for her. She is trying to figure out a way to pay all her bills. Her boyfriend offers to help, but he doesn’t have enough money either. At that moment she receives a call from her company’s human resources department. They ask how she is doing, and ask if she knows about her disability insurance. It turns out that she is covered with long-term disability insurance, which will provide her with a monthly check, just enough for expenses, until she is able to go back to work. The long-term disability insurance was part of a group plan she had signed up for when she first started work, and the premiums had been coming out of her paycheck without her even noticing it. She had completely forgotten about it! Rachel lets out a huge sigh of relief.