As a construction worker, you toil in one of the most physically demanding professions. Heavy lifting. Operating heavy equipment. Spending hours on your feet.
Get seriously sick or hurt, and you may not be able to work for an extended period. That means lost income.
Workers' compensation can help, as long as your injury or illness is work-related. But what happens if you’re hurt off the job? Plus with many long-term injuries, it may be difficult to prove that your job was the cause.
You need protection against the risk that a non-work injury limits your ability to earn a living as a construction worker.
The best way to protect you and your family from the potential for lost income is disability insurance. It’s designed to replace a major portion of your income if you are unable to work due to injury or illness.
Without disability insurance, you could lose a significant amount of income and all that your income supports if you’re in a bad accident, lose your vision, or suffer an illness that affects your ability to work in your chosen trade. Even if the disability is temporary, you could fall behind on your mortgage or car payments, rack up more debt, and be forced to sell valuable items or tap into retirement accounts for needed cash.
Disability insurance can also help if you have to work in a different profession for less money because an injury prevents you from working construction.
According to the Bureau of Labor Statistics, the median salary for construction workers in 2020 was just over $37,000 a year. That number is expected to climb as the job outlook increases 5 percent over the next decade, yet the industry is currently having trouble filling existing openings.
Short-term disability coverage is usually provided by employers and covers individuals, on average, for about six months. You will typically be reimbursed for about 60 percent of your lost wages due to disability.
Long-term disability coverage is designed to protect people from illness or injury that keep them out of work for an extended period. Benefits may last from five to 10 years, and some will pay up until the insured reaches age 65.
There are two main sources for where to get disability insurance: You can buy a policy that’s part of a large group plan, either through your employer, labor union, or trade association; and/or purchase your own individual policy.
Here are examples of what construction workers might pay for disability insurance:
- A 30-year-old male builder living in Spokane, Washington, and earning $35,000 a year could get an $800 monthly benefit for $20 a month, a $1,500 monthly benefit for $34 a month, or a $2,220 monthly benefit for $52 a month. These rates are for a 5-year benefit period and a 90-day waiting period.
- A 37-year-old female bricklayer living in Cincinnati, Ohio, and earning $32,000 a year could get a $700 monthly benefit for $30 a month, a $1,400 monthly benefit for $52 a month, or a $2,000 monthly benefit for $82 a month. These rates are for a 10-year benefit period and a 90-day waiting period.
- A 44-year-old male who owns a construction business in Albuquerque, New Mexico, and earning $80,000 a year could get a $1,500 monthly benefit for $35 a month, a $2,900 monthly benefit for $74 a month, and a $4,250 monthly benefit for $116 a month. These rates are for a 10-year benefit period and a 90-day waiting period. The rates also reflect a professional who does little to no manual labor on the job.
- A 52-year-old male who works as an independent flooring installer in Baton Rouge, Louisiana, and earning $35,000 a year could get an $800 monthly benefit for $44 a month, a $1,500 monthly benefit for $75 a month, or a $2,220 monthly benefit for $125 a month. These rates are for a 5-year benefit period and a 90-day waiting period.
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Insurance companies set your monthly premium on the following factors:
- Your age and health. The younger and healthier you are, the less you will pay.
- Your income. Disability insurance is designed to replace a percentage of your income if an injury or illness limits your ability to work as an attorney.
- Where you live.
- The benefits and features of your disability insurance policy.
Another factors that strongly influences what you pay for disability insurance is your job.
Disability insurance companies group jobs into specific occupational classes. These classes take into account the hazards of the job and the difficulty in returning to work following a disability. Another factor is the claim experience associated with certain professions.
Disability insurance companies generally classify occupations on a scale of 1 to 5 or 6. Typically, the higher the numerical value of the classification the lower the rate available from the insurance company.
Regardless of your role in the construction industry, you likely will not be rated in a high occupation class. For example, one disability carrier with five rating classes classified construction industry office workers, supervisors, estimators, and others with no manual duties in its 2nd rating class. All other construction jobs were rated lower. Many commercial and residential trades would be rated in this insurer’s B class, which designates the most hazardous work that the insurer will cover. The same insurer indicated that they would not cover air hammer operators, explosives handlers, asbestos workers, flaggers, and crane operators. In addition, workers on bridge, dam, structural steel, and subway/tunnel projects could not get covered.
Another insurer classifies supervisors and foremen a little better, putting them in the 4th class among 6 occupation classes. Most other construction trades are classified in the 1st class by this insurer, and the most hazardous construction jobs, as mentioned above, are uninsurable.
Learn More: The Cost of Disability Insurance
As you shop for disability insurance, here are a few considerations.
The most important provision you need to have included in your policy is that a disability is defined as one that prevents the insured from working in his or her “own occupation.”
What constitutes disability depends on the policy. Some are known as “own occupation,” and will pay benefits if an injury prevents you from working at your normal job, but allows you to do other types of work.
Another provision you should consider is residual disability. This feature may provide benefits if can still work following a disability but are not considered totally disabled. It is designed to protect you against partial income loss. It comes into play if you are able to perform some, but not all, of the material duties of your occupation or if you are unable to work for a set percentage of time. Benefits are typically calculated as a percentage of your loss of earnings or what you would receive if you were unable to work.
Finally, if you own a construction business, your disability coverage should also include business overhead expense (BOE) insurance.
Whereas regular disability insurance covers individual income, a BOE policy will help cover your monthly business expenses if an injury or illness impacts your ability to work.
BOE policies vary but you can typically get one that pays a maximum monthly benefit between $15,000 and $25,000. If you obtain BOE that is bundled with your personal disability policy, the maximum benefit may be a factor of that benefit amount; for example, the BOE benefit maximum might be equal to 12 times the benefit on your personal policy.
BOE benefits can help you cover your truck payment and other expenses that will be owed even if you are not operating.
Learn More: Small Business Disability Insurance
Joel Palmer is a freelance writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.
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