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DISABILITY INSURANCE 101: 4 Myths That Could Cost Your Financial Freedom

For many Federal employees, their biggest asset isn’t their home or the size of their retirement savings.

Instead, their biggest asset is their ability to work and bring home a paycheck. Without that, many other financial plans fade away.

But too many Federal employees don’t add disability coverage to their financial plan. Here are a few of the myths that may be stopping you.

MYTH #1: The Government Has You 100% Covered
Federal FERS employees do have FERS Retirement Disability coverage. But it is LIMITED. For example, you must be employed for at least 18 months and your disability must be expected to last at least a year to receive payments. The FERS Disability Annuity is taxable. The first year of payments covers 60% of your base pay and coverage drops to ONLY 40% in the second year and any year thereafter until reaching retirement age.

MYTH #2: The Odds of Becoming Disabled Are Very Low So I Don’t Need Coverage
If you’re like most working individuals, you think the chances of becoming disabled for an extended period due to an injury or illness will not happen to you. In 2020, the U.S. Social Security Administration reported that more than 25% of 20-year-olds will experience a disability that keeps them out of work for at least a year before they reach retirement age.1

MYTH #3: Long Term Disability Insurance Is Like Worker’s Compensation
Worker’s Compensation only pays benefits if an accident occurs on the job. But you don’t need to be disabled in a work-related incident to collect benefits from Long Term Disability Insurance. That’s important because 90% of disabilities are caused by illness, not accidents.2 Back injuries, cancer, heart diseases and other illnesses cause the majority of long-term absences.

MYTH #4: I’ll Just Rely On My Savings If I Can’t Work For A While
Do you money in your savings to survive without a paycheck for three or more years? The average disability claim lasts 34.6 months.2 Only 48% of American adults say they have enough savings to cover three months of living expenses if they’re not earning any income.3 Without a paycheck, how long could you stay in your home or remain afloat based on your savings?

How Much Disability Coverage Do You Need?

Adding disability coverage is an important decision. But figuring out your benefit level can be just as important a consideration. Use this calculator to find out how high you might need your monthly benefits to be:


You insure your car, your home and your health. Shouldn’t you also insure your paycheck? GEBA’s Group Long Term Disability Insurance underwritten by New York Life Insurance Company provides tax-free income4 in the event that you cannot work due to a covered accident or illness.

1 Social Security Administration, Disability and Death Probability Tables for Insured Workers Born in 2000.
2 Deborah L. Meyer, C. (2020, September 09). Are you underestimating your need for disability insurance? Retrieved April 12, 2021, from
3 Employee Benefit Research Institute, “The 2020 Retirement Confidence Survey,” 2020
4 Consult your tax advisor

Group Long Term Disability is underwritten by New York Life Insurance, 51 Madison Avenue, New York, NY 10010 under Policy Form GMR. Visit for features, costs, eligibility, renewability, limitations, and exclusions.

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