Disability Insurance

How long could you stay the course if you lost your ability to earn your present income?

You take on the financial responsibility of insuring your most valuable assets. You insure your home and its contents to protect against theft, fire and even flood. You insure your auto from the financial impact of auto-related damages or injuries. Perhaps you insure other valuables, such as jewelry, antiques and collectables.

Do you insure your income? Your income is your most valuable assetóone that makes owning your home and automobile possible. But have you considered that your income also determines your current standard of living and provides for your long-term financial goals? Unfortunately, itís all at risk should you suffer a disability, and disability is much more common than you might think.

THE RISK OF DISABILITY: COULD IT HAPPEN TO YOU?

Itís human nature-most of us donít want to think about getting sick or injured, or about struggling financially because we are unable to work. Yet itís a possibility we all must consider, especially since disability is a common-and growing-problem, and personal savings rates are at historic lows.

Take a moment to digest these facts:

  • A 20-year-old worker has a 3-in-10 chance of becoming disabled before reaching retirement age. (www.socialsecurity.govldibplan)
  • A disabling injury occurs every three seconds in a public setting and every four seconds in the home. (National Safety Council, "Injury Facts," 2007 Edition)
  • The number of workers who become disabled has risen by 35% since 2000 as reported by the Social Security Administration.
  • (www.disabilitycanhappen.orglnewslsurvey_summary.asp)
  • The personal savings rate in the United States averaged just 0.5% in 2007, with a seven year average at 2.0%.
  • (US. Bureau of Economic Analysis, 2007)
  • But what does this mean to real people and the lives they lead? The numbers below tell the troubling story:
  • Two-thirds of American families live from paycheck to paycheck.
  • (Parade Magazine, "Is the American Dream Still Possible?" April 23, 2006)
  • Disability is the leading cause of personal bankruptcies. It causes nearly 50% of all mortgage foreclosures, compared to 2% caused by death.
  • (Health Affairs, The Policy Journal of the Health Sphere, 2 February 2005)
  • More than 70% of working Americans do not have enough savings to meet short-term emergencies, let alone a long-term disability.
  • (National Investment Watch Survey,A.G. Edwards Inc., 2004)
  • As you can see, losing your income to a disabling illness or injury could happen to you. So how would you answer these important questions?
  • Could I afford to live without my income?
  • How much of my current income goes to cover living expenses each month-the mortgage, car payments and gas, utilities, food, and home repairs-and how would these be paid with no income?
  • How long would my savings last?
  • What lifestyle changes would my family or I have to make to accommodate the lost income?
  • What would happen to plans for the future-college funding, travel, retirement and legacies?

You see, the risk of disability isnít just physical. The consequences can have a profound emotional and financial impact on you, your loved ones and your future opportunities.

The first step to determining your needs in the event of a disability is to objectively analyze how a short or long-term disability would affect your overall financial plan. This should include analyzing your needs as well as available dependable resources. This information can help you to make an educated and well thought out decisions on how to protect yourself and your family in the event of a disability.

A few considerations are:

  • How much coverage do you have through your employer?
  • Will it cover you if you canít perform the duties of your present occupation?
  • Will the benefits you receive be taxable?
  • Will the benefit cover your total earned income or just your base?
  • What is the insurance providerís definition of disability?
  • If you change jobs will you lose your coverage?
  • Should you consider securing your own coverage?
  • If you are self employed you will have different needs and programs to consider.

It is important to know that individual disability insurance contracts can be specifically tailored to help meet your personal needs. Since features and benefits can vary widely from policy to policy, you should consult with an advisor who can help you to assess your needs and help you to make an informed decision.

We understand without proper protection planning your way of life might be at risk should you become disabled. One of our wealth advisors can help you to objectively analyze your needs and, if appropriate, help you in selecting and implementing a suitable program.

While no one likes to think about worst case scenarios it is always helpful to be prepared for them and therefore be better positioned to focus on the things you most enjoy in life.

If you would like learn more about disability insurance needs please contact us at 516.394.2503.