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Most American’s are financially more prepared to die, than to become disabled. This is due to the fact that a much higher percentage of people have life insurance but fail to purchase disability insurance.
Many people are not considering the potential for disability which would leave them unable to work. For persons who are not disabled, the employment rate is about 80.5%. However, those with severe functional limitations are looking at an employment rate closer to 27.6%.
What is disability insurance?
Despite your inability to work you still have to pay your mortgage; you have to buy food; you have to carry on paying all of your living expenses. That’s where disability insurance comes into play. It’s exactly as it sounds. It covers you in the chance that you become disabled and are no longer able to perform your job.
How long does disability insurance cover you?
As mentioned by Zak in our podcast this week, good disability insurance should cover you to the age of 65 or about 30 years of income.
With that said, you need to pay attention and make sure you have an “own-occupation policy.” An own-occupation policy will cover persons who are unable to perform the majority of skills they are trained to do.
For example, if you are a surgeon and you lose dexterity of your fingers, you are no longer able to perform surgery. However, despite your inability to carry out the duties you are trained and licensed to perform, you are still able to do other jobs (i.e. pouring coffee at Starbucks).
Your skills and education far exceed the skills of a barista. You are probably living a comfortable lifestyle based on your salary as a surgeon. Make sure you have a policy in place that covers your inability to perform the job you are trained for.
How do you get disability insurance?
If you work for a large corporation, the chances are good that a group disability policy is available to you. The average group disability policy will cover 60% of your salary if you were to become disabled.
If your company does not offer a group disability policy or if you are an independent contractor, you’re on your own to find a policy. You have to shop the open market for a policy that best suits you. Unfortunately, disability insurance is not cheap; however, it outweighs the alternative – losing your income.
We know this has not been the most up-beat blog post we’ve published, but it may be one of the most important. We can’t stress that enough.
If you don’t have a policy in place, look into it. Check with your company and find out if there is a group policy available to you. If this opportunity doesn’t pertain to you, hit the open market and weigh your options. As we have stated in previous posts, shop around. Check out multiple choices.
If you have any questions regarding disability insurance, please reach out. We would be happy to help.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
No strategy assures success or protects against loss.
This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. Please keep in mind that insurance companies alone determine insurability and some people may be deemed uninsurable because of health reasons, occupation, and lifestyle choices.
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