Once again Unique Estate Law brings you a financial topic from Jay Dworsky on this Financial Friday. Today Jay explains disablity insurance.
Disability insurance pays benefits when you are unable to earn a living because you are sick or injured. Most disability policies pay you a benefit that replaces only a percentage of your normal earned income when you are unable to work. Very simply, that’s what it does.
Why do you want disability insurance?
The probability of you ever being disabled for longer than three months is much greater than your chances of dying prematurely, because of the advancements in medicine can keep the most desperate of situations alive. The likelihood of suffering a disability by age 50 is 25% (Source: 1985 Commissioner’s Individual Disability Table A).
Think about what would happen if you suffered an injury or illness and couldn’t work for days, months or even years. Maybe your single, do you have the savings or other means to keep paying the mortgage, groceries and medical bills. If you are married, can you rely solely on your spouse’s income? It’s highly likely if you’re married there are children or other dependents. With that information, one might come to the conclusion there is more than enough evidence to want the protection of disability insurance. However, as human beings we have the greatest capacity to rationalize why we make the decisions we make all day long, minute by minute, second by second and moment to moment. It’s actually quite amazing.
The fact is our health is the most important asset we have going for us. We need to protect our health as it is our lifeblood and earning potential. We can take all the steps to healthy living, self-preservation and the like but that may not prove to be enough, life happens. Our last line of defense is to place rubber-bumpers and safety nets underneath our plan with disability insurance, i.e. income protection.
Disability Insurance and Business Owners
If you own a business, disability insurance can help protect you in several ways. You can protect your own income with a policy on yourself. You can also purchase a policy on key persons to reduce the negative (or devastating) impact that the person's disability may have on the business. Lastly, you can buy a disability policy on a business partner which could enable you to buy his or her interest in the event that he or she cannot work.
Further, if you are an employee of a company, you might have access to group disability or you can always get coverage privately. The thing to do is get educated, contact Jay to discuss any of your questions and concerns.