If Somebody were to ask you, “What’s your most valuable asset?” what would your answer be ?
Perhaps you’d automatically reply: “My home.” Or, on second thought, you’d change that to: “My family.” Or “My good health.” Or possibly: “My reputation.” These are all good answers. But if we limit the question to your personal finances, the best answer you could give would be: “My income.” After all, without an income, you might not be able to keep your home…it would be difficult to support your family…and you would not be able to handle all the expenses of daily living and meet your obligations.
That’s why it’s so important to insure your income!
After all, you insure your home, your life, your car, your other personal property, your medical expenses, and perhaps even your pets or your vacation trips. But if you were to become disabled, no doubt your income would drop significantly or cease altogether. And, unless you have the right kind and amount of Disability Insurance, whatever insurance you may currently have would not provide you with any replacement income whatsoever!
With significantly less income, or no income at all, how would you…
- Make your mortgage or rent payments?
- Pay for gas, electric, water or other utilities?
- Buy food, clothing, prescription drugs, etc.?
- Make the payments on your credit cards?
- Pay current or prior educational expenses?
- Make the payments on your vehicle(s)?
- Pay the premiums on your other insurance?
- Make the payments on any loans you have?
- Pay any back taxes or meet other obligations?
- Put aside some money for retirement?
- Continue to practice your profession or keep your business operating?
The bottom line is this: You simply can’t afford to ignore the possibility that —sooner or later—you, too, may become disabled.
It doesn’t happen only to the “other guy.” It could happen to you! Most people don’t know why most disability happens at all…
Contrary to popular belief, accidents are not the leading cause of disability
When you think about the causes of disability (if you ever do), you probably picture somebody falling off a ladder, getting injured in a factory, or being in some other type of serious accident.
If so, think again.
According to the Council for Disability Awareness, the leading (92%) causes of disability are not accidents at all. They’re illnesses. Nearly 23% of new disability cases are the result of musculoskeletal or connective tissue disorders, and another 13.6% are caused by cancer. Other major causes include heart disease, diabetes and depression. Accidental injuries account for only about 8% of all disability cases. There’s a lot you can do to help avoid accidental injury. But there’s little or nothing you can do to help prevent many of the physical or mental disorders that can often lead to disability. Especially if it’s an inherited problem.
Some believe there’s only a slim chance they will ever become disabled, and therefore ignore the need for Disability Insurance protection
- Workers have a 30% chance of becoming disabled before reaching retirement age.
- In the last 10 years, the number of workers who have become disabled has risen by a whopping 35%.
- On average, a disabling injury occurs every 4 seconds in the home and every 3 seconds in a public location.
- Nearly 50% of all mortgage foreclosures are caused by a loss of income due to disability.
- The leading cause of personal bankruptcies is loss of income due to disability.
- Disability can reduce or end your ability to earn a living.
- Disability can affect anyone—regardless of age, gender, occupation, lifestyle, health, wealth or anything else.
If you already have Disability Insurance via a group plan, do you still need an individual policy?
It is quite possible you do—especially if you want to continue your current lifestyle or close to it. If you’re like most people, more than 60% of your income—or perhaps much more—goes for monthly expenses: rent or mortgage payments, utilities, food, educational expenses, credit card payments, clothing, car payments, savings, investments, financial support of relatives, etc. The problem is, the typical group plan pays only about 60% —or even less—of the income you receive from your employer (or from the services you perform as an association member). So about 40% of your expenses would not be covered. Also, if your employer or business pays some or all of your premiums, you would have to pay taxes on the benefits. And your employer might decrease the benefits or cancel the plan at any time. An individual policy, if you select the right one, can cover more than 60% (perhaps as much as 100%) of your income…your coverage could continue even if you lose your job…and your benefits would be tax-free.
If you were to become disabled and unable to earn the income you now receive, could you replace any, most, or all of that income?
Probably not-unless you take the right action right now! In life, one thing’s for sure: change happens. No one can accurately predict the future. Like it or not, bad things happen to good people. That’s why you need to hope and plan for the best, but prepare for the worst. And one of the worst things that could happen to you, as your family’s income-earner, is to lose that ability. Even if your spouse is an income-earner, too, the loss of your income could be devastating and long-lasting.
What would you do if you became disabled tomorrow? What could you do to get income?
- Ask your employer for help? If you’re an employee, or even an executive, of some company, perhaps you could continue receiving part or all your salary…but only for a limited time. After a certain number of weeks or months, you would probably be told, “We’re sorry, but…” and be dropped from the payroll.
- Keep paying yourself, if you own the company? If you own a business or a professional practice, you might receive all or part of your regular income—but only if your business or practice could be run without you…and only if there are enough funds to pay you.
- Withdraw funds from your savings? Assuming you have any savings, how much could you withdraw each month, and how long could you do this? Chances are, you won’t like either of those answers.
- Apply for Social Security Disability Income? This is a fine program—but it’s very difficult to qualify for it. You need to have paid enough FICA taxes over the years, partial disability is not covered, your disability must be expected to last at least 12 months, and the application process can take as long as six months. Currently, about 60% of first-time claims are denied, and—due to the federal deficit—this percentage might climb even higher. Even if you are finally approved, the amount of each monthly payment may not be nearly enough for all your needs, and it could be six months before you receive your first payment. Could you wait that long?
- Apply for workers’ compensation? In most states, these (limited) benefits only cover employees who have suffered job-related accidents or illnesses—not anyone with a disability due to some other causes. And if you’re self-employed, you may not be covered at all.
- Start selling your assets? If you’re like most people with a good income, you may have a limited amount of assets to sell: real estate, stocks, bonds, fine art, collectibles, office equipment, jewelry, vehicles, hobby items, clothing, etc. However, once they’re sold, that’s it. Selling assets may keep you going for a short time, but your disability could last far longer.
- Rely entirely on your spouse’s income (if any)? If you’re part of a two-income family, will your spouse’s income—by itself—be high enough for all your needs? Even if you cut out all the luxuries and reduce your monthly expenses (where possible), will enough cash be coming in, regularly, to keep you going—especially if you have new medical expenses or special needs?
What should you look for when you’re considering a Disability Insurance policy?
This probably has your wheels turning… good! What you have to know now is that disability Insurance policies are not all the same. There can be—and often are—significant differences between policies in regard to eligibility requirements, coverage, benefits, options, premiums, the application process, and the underwriters who issue the policies. That’s why you need a knowledgeable agent.
For a free no-obligatory quote please call or email me your date of birth and zip code. I can quickly email you quotes and you can easily apply directly online if you like what you see.
Call: Neil Primack 561-935-3907