Disability Awareness

In the insurance industry, the month of May is disability awareness month. Although a busy May, 2017 has come to an end, I still want to comment on the importance of disability insurance and share some thoughts…

Disability Income Insurance is critical protection to have during one’s working years but it is often overlooked. People insure their homes, cars and other valuables in order to replace those things if something happens. But have they insured their greatest asset which is their ability to work and earn and income? Income drives everything in our financial lives; it supports our lifestyles, needs, wants and commitments, and income allows us to save for retirement.

Most people can name at least one person who has become temporarily or permanently disabled. I personally know what it is like to be diagnosed with an illness out of the blue and be too sick to work full time. It may never happen to you, but what would the financial, physical and emotional consequences be to you and your family if you had an accident, illness or injury that prevented you from earning an income?

• What changes would you have to make to your current lifestyle?
• What would be the source of your monthly cash?

I won’t get into the specifics of disability insurance policies and benefits, but here are some general suggestions…

1. If you’re an employee, check to see if your company offers group disability insurance and that you are participating in it.
2. If you are an executive or a high income earner, the group disability benefits at your company may not replace enough of your income, so consider individual (or supplemental) policy to cover the gap.
3. If you are a sole proprietor you are not eligible any state disability benefits in CA, so protect yourself and family with an individual disability policy.
4. If you have a business or practice where you provide services to clients or patients, also consider a Disability Overhead Expense policy to keep your business open and operating while you are out with a disability. This gives you a business to come back to without having to completely rebuild.
5. If you are a co-owner or partner in a business, do you have Disability Buy-Out insurance as part of your buy-sell agreement?
6. If you are working past age 65 to fund your retirement, your existing disability coverage may end or be reduced at age 65. However, you can acquire a new disability policy to cover the gap between ages 65 and 70.

Statistically speaking 1 in 3 Americans between the ages of 35 and 65 will become disabled for more than 90 days. The average long-term disability claims lasts 31.2 months and the majority of disability claims are based on an illness rather than an accidents. A disability policy won’t prevent you from becoming disabled, but it will mitigate the financial hardship of a short term or long term disability.