Disability Income Insurance
The American worker expects to work every day, earn a living, pay their living expenses and hopefully have something left over at the end of the month. For most, these values are impressed on us at an early age. We are like the US Mint, a money machine that must continually earn until we can retire. Regretfully, many American workers become ill or injured and may become unable to earn a living doing what we have done for so many years.
This is America, right ? We have a backup plan called Social Security. We pay into the plan year after year, so when the worst thing happens; we have a Plan B. According to NOLO, it can take from 3 months to two years for your social security claim to be approved depending on the state where you file. In the mean time, you will exhaust your savings, cash in your 401K, borrow from friends and then eventually move back in with your parents.
There is a Better Way
Purchasing Disability Income Insurance (DI) is the most affordable way to mitigate the risk that you will be injured or become ill and cannot work. We insure our car to get us to work; shouldn’t we insure our ability to work in the first place? Disability Insurance will provide periodic payments of benefits when you are unable to work because of an injury or illness. The typical DI policy will pay 45 to 65% of your verified gross income on a tax-free basis until you can return to work or reach age 65. Certainly 65% of your income will not be sufficient for everyone, but, it can certainly help most workers survive an economic catastrophe.
How it Works
Simply put DI insurance kicks in after you become disabled due to illness or injury that prevents you from working at your occupation. When you purchase a policy, your benefit level is determined by your verifiable gross income and a waiting period is established before benefits become available. Your monthly premium (how much you pay in) is typically based on several factors such as your age, occupation, annual income and health history. With so many insurance companies offering DI insurance and so many different types of plans available, it’s very important to ask the right questions of your agent :
- Is the insurance company highly rated ?
- Is my policy non-cancelable ?
- Is my policy guaranteed renewable ?
- What is the policy’s definition of "occupation” ?
- Can I go back to work and receive partial benefits ?
- How is my earned income calculated ?
- What waiting periods are available ?
- Can I increase my benefit as my income increases ?
- For how long are benefits payable ?
- Does my policy have a Social Security rider ?
It’s interesting to note that for younger workers, age 25 – 45, their chances of becoming disabled are much greater than their chance of dying yet most choose to forgo DI insurance unless it is part of their group benefit package.Contact us about helping you preserve your ability to earn and you’ll be pleasantly surprised at the price and value of this important income protection.