Disability Income Replacement for Association Members
It’s taken a while to gain the lifestyle that you’ve always dreamed of and you don’t want to loose it. This is why Long Term Disability Insurance is such an important part of your financial planning.
If you were to become disabled, how would you pay your monthly bills? Would you have to sell your house or other possessions? Being disabled is not necessarily a pleasant thought but it is your responsibility to protect yourself and your loved ones. In fact, a sad reality is that many marriages have failed, when a spouse has become disabled, due to the increased financial strain put on the family. That being said, it’s time to ask yourself “Would you rather earn 100% of your income and risk losing it all or would you rather earn 95% of your income and have it guaranteed to be there?”
Your potential to earn an income is your greatest asset. It is larger than your house and your cars combined! Take a look at the chart below and see how much you will earn throughout your lifetime. Isn’t that worth insuring? You’ll earn a fortune.
What is Disability Insurance?
Disability Insurance is designed to pay you a monthly benefit, should you become disabled. The amount of benefit is based on your income and the benefit is usually tax free. Most disability insurance policies will pay you the monthly benefit until you reach age 65, as long as you are still disabled. Shorter benefit periods are sometimes offered to workers of more hazardous occupations.
Age, sex, occupation and amount of benefit all play a part when determining price. As most policies require a medical exam, any current medical condition may result in a higher price or exclusion. Most insurance companies will also want to see proof of income at the time of application.
The Chances of Disability
Many people don’t think that they will become disabled, usually because they don’t want to imagine themselves that way. They may believe that they are careful, healthy and work in a low risk occupation. While all that may be true, it does not guarantee that they can’t become disabled. People do become disabled from all sorts of different reasons, whether accident or illness. In fact before you reach age 65, you have 3x as much of a chance to become disabled than that of dying. The chances of it happening are very real.
Out of 1,000 people, the number who will be disabled before 65:
- Age 25 : 522 or 1 out of 2 people
- Age 30 : 505 or 1 out of 2 people
- Age 35 : 480 or 4 out of 9 people
- Age 40? : 446 or 4 out of 9 people
- Age 45 : 401 or 2 out of 5 people
- Age 50 : 342 or 1 out of 3 people
- Age 55 : 266 or 1 out of 4 people
- Age 60 : 160 or 1 out of 6 people
Disability Insurance comes in many forms and in many different qualities. Disability insurance is really a “get what you pay for product”. If it is good coverage, it’s not going to be cheap. The only way an insurance company can sell “cheap” disability insurance, is to NOT pay out many claims. Due to many limitations and exclusions within the “cheap” disability insurance contract, you may not qualify for benefits. A good disability policy should cost about 3-5% of your income but it will also come with more client friendly wordings, enhanced features and limited exclusions. Remember, a disability insurance policy is only as good as its ability to pay a claim.
Are you willing to take the chance that your income will not be interrupted? Please insure your income and your family’s lifestyle.
Average disability which lasts over 90 days usually lasts: