| Disability insurance has been labeled as another | | | | even with short term disability, your expenses have |
| "necessary evil." However, many don't even feel it's | | | | the potential to skyrocket. |
| necessary. They just see it as evil. | | | | - I have Group Long-Term Disability (LTD) at work. |
| So why do I own disability insurance? | | | | A company's long term group disability coverage |
| It's simple. Just like life insurance, I am transferring the | | | | usually only covers 50% of your earnings. Can you |
| risk from me to someone, or something, else. | | | | and your family live on half of your current income? |
| Comedian Jerry Seinfeld has a bit that I like to relate to | | | | And even if you could, would you really want to? |
| this topic. He wonders about the purpose of the | | | | Again, your expenses are likely to increase because |
| helmet when skydiving: | | | | of your disability. These plans typically exclude |
| What is the point of the helmet? If that chute doesn't | | | | bonuses and overtime pay. Also, the benefits are |
| open, the helmet is wearing you for protection. | | | | generally taxable. This means that your half salary can |
| According to MetLife, more than 80% of working | | | | shrink even more. |
| Americans aren't covered adequately or don't have | | | | So, what now? If you are beginning to see value of |
| any disability income insurance. So, 80% only have a | | | | disability insurance now and don't have it or feel you |
| helmet or nothing at all! | | | | lack sufficient coverage, I suggest: |
| So why are so many individuals uninsured or not | | | | - Get educated. |
| covered adequately? Here are some frequent | | | | If you are still unsure, get more information. In the |
| responses: | | | | beginning, I got a little education from my financial |
| - I don't need it. | | | | planner. He showed me the importance of having |
| You're probably right. You don't need it. But would you | | | | disability insurance. He also showed me how my |
| want it? By not having it, you are putting your assets | | | | company's coverage was insufficient. So, I suggest |
| at risk because they would have to cushion the | | | | meeting with your financial planner or a licensed agent |
| financial blow. And remember, there is no such thing as | | | | in order to get better educated on the benefits of |
| self-insurance. You are either insured or not. Getting | | | | these policies. |
| insurance allows you to enjoy your assets without | | | | - Buy young. |
| risking them due to disability. | | | | I bought my first private disability insurance policy at |
| Studies show that a 20-year-old worker has a 3-in-10 | | | | age 24. I bought it at a young age so my insurability |
| chance of becoming disabled before reaching | | | | wouldn't be an issue. Be sure to have a long wait |
| retirement age. Why carry that risk? | | | | period. Along with buying the policy at an early age, this |
| - I can depend on Social Security. | | | | will make the premiums more affordable. |
| Per our federal government website: "Social Security | | | | - Have a strong definition of disability. |
| pays only for total disability. No benefits are payable | | | | When you sign for your policy, ensure that your |
| for partial disability or for short-term disability." | | | | definition of disability is your "own occupation." This |
| So what does that mean? | | | | means that you are covered if you are not able to |
| Let's say you are a doctor and you injure your right | | | | perform substantial duties of your occupation because |
| hand. The injury prohibits you from doing surgeries. You | | | | of your disability. It doesn't matter if you are able to |
| can't get disability via Social Security because you are | | | | adjust to another job. |
| able to adjust to other occupations, like car sales. | | | | - Keep it. |
| "Disability" under Social Security is based on your | | | | As long as you keep paying the premiums, you own |
| inability to work. So if you can work in any capacity, | | | | the policy. It's portable. One of the drawbacks with |
| chances are you won't get disability income. Also, they | | | | group LTD at your employer is that coverage ends |
| use "other" factors to determine if you even qualify for | | | | once you leave or the policy is terminated. With a |
| coverage. Your chances of becoming disabled may | | | | private policy, you are covered no matter what your |
| be greater than your chances of getting coverage. | | | | employment situation is. |
| - I can use my emergency fund. | | | | If you become disabled, your benefits will be paid to |
| The purpose of your emergency fund is for | | | | you tax free. Why? Because you paid for the |
| emergencies. But when it comes to disability, that's of | | | | premiums with after tax dollars. So, it doesn't matter |
| a different kind. This fund is for things like immediate | | | | what your tax bracket is. Uncle Sam can't cash in on |
| car repairs, air conditioner breaks down, temporary | | | | your disability income. |
| unemployment, etc. | | | | Private disability insurance is very important to our |
| Remember, an emergency fund is supposed to keep | | | | financial plan. It protects us and our assets. |
| you afloat for only a few months (i.e. 3 months, 6 | | | | So the question is, do you have a helmet or a |
| months, 12 months). Long term disability can deplete | | | | parachute when going through the risks of life? Or, are |
| your savings in one fail swoop. An emergency fund is | | | | your assets wearing you for protection? |
| calculated using your current monthly expenses. But | | | | |