Don't
Let Disability Derail Your Financial Future
It’s
been called the “living death.” A serious illness or injury that results in
a disability can pose risks to a family that may be far more detrimental than
the premature death of a primary wage earner. Living expenses are virtually
guaranteed to increase, and income is likely to fall.
Much attention is given to owning adequate life insurance, but planning for a possible disability could be
of even greater importance. In 2000, the average household had enough life
insurance to replace about 35 months of disposable income. Yet one survey found
that 82 percent of U.S. workers either have inadequate or no long-term
disability income coverage.1
Risk
of Financial Hardship
Having no disability insurance coverage is alarming in light of the risks. A
40-year-old man is almost three times more likely to suffer a long-term
disability than death. A 30-year-old man is more than four times more likely to
become disabled than die.2 When you consider
that an American is injured in an accident every two seconds, it’s easy to see
that a life-changing event can strike without warning.3
One way to help reduce the financial effects of becoming disabled is to consider
purchasing an individual long-term disability income insurance policy.
If you become disabled, disability income insurance pays a monthly benefit that
can be used to help pay living expenses, such as a mortgage, car payments,
groceries, and utility bills.
Group vs. Individual Policy
You may already participate in an employer-sponsored disability income insurance
program. However, group policies generally pay much less than your regular
earnings — which could be a real problem at a time when you’re saddled with
medical bills.
An individual policy can pay a higher percentage of your earnings, but that
percentage will vary depending on the policy you select. If you pay the premiums
yourself, the benefits are generally tax-free.
The idea of being unable to work for any length of time can be scary. But with
the appropriate individual disability income insurance policy in place, you can
know that a certain portion of your family’s needs will be taken into account
if you can no longer keep working.
1) Life Insurers Fact Book, 2001; Advisor Today, May 2002
2) 2002 Field Guide, National Underwriter Company
3) Advisor Today, May 2002
©
2002 Emerald Publications
