According to the U.S. Census Bureau, nearly
one in five Americans will become disabled for a year or more before the age of 65. If you experience a serious illness or injury, how would you cope financially without a regular paycheck? Disability income insurance is designed to complement health insurance. It provides financial peace of mind for you and your loved ones in the event that you are sidelined by a serious illness or injury by protecting your future income potential.
Your Income is Worth Insuring
While your employer may cover you with some form of company-paid disability insurance, often coverage is only partial and/or short-term. Purchasing a personal disability income policy from Gaspar Insurance Services can help you cover any financial gaps that you may have with the added bonus that these benefits are paid to you and are not taxed.
Insuring Against Loss of Income
Policy Considerations
Your most valuable asset is your ability to earn an income. Should you or your spouse experience a serious illness or injury, how would the loss of income impact you? In addition to your day-to-day living expenses, a disabling injury can also lead to additional expenses, such as increased medical and household costs. To protect against financial hardship, anyone who earns money—whether single or married, with children or without—should consider a personal disability income insurance policy. When selecting coverage, you will want to consider the following policy features:
- Definition of disability: Some policies pay benefits if you are unable to perform the duties of your regular occupation, while others pay only if you can engage in no gainful employment at all. Some policies also pay benefits if you become ill or injured and are unable to earn a specified percentage of your income. Understanding how a disability is defined will help you to select a policy that best suits your needs.
- Amount of income: This amount varies by policy, but a policy that pays 50 to 60 percent of your monthly salary (not including bonuses or commission) is the most common and most affordable option. It’s best to first evaluate your other sources of income to determine the amount of disability income coverage that you will need.
- Length of benefit period: You can choose to receive benefits that are payable from one year, two years, five years or to retirement age. Opting for coverage that lasts through age 65 affords the best protection against an injury or illness that permanently removes you from the workforce.
- Residual benefits: Selecting this feature will give you partial payment in the event that your income is reduced because you are unable to fulfill some, but not all, of your job responsibilities.
The Wall Street Journal published the letter below that is a prime example when Disability Insurance saves a family from a financial crisis. The original letter can be found
here.
During most of my 31-year insurance career, I tried to convince people of the need for disability income insurance (DI). If you get sick or injured and can no longer work, DI is designed to replace a big chunk of your lost income. In a cruel irony, I am now receiving disability payments as I battle bone-marrow cancer, a disease that cost me my career and my income. Were it not for my DI coverage, my family would be facing a financial crisis.
Unfortunately, DI tends to be the forgotten coverage. In “The Best Financial Advice I Ever Got” (Journal Report, June 17), Ted Jenkin advises people to invest 2% of their incomes in themselves. We often don’t think about “our most valuable asset: our ability to earn an income,” he said. What he didn’t say is that DI-premium payments would fit comfortably within that 2% of income threshold. After all, no matter how well you plan for the future, everything can be derailed by a disability. Right below his remarks were those of Marguerita Cheng, who advises people to be prepared for the unexpected by getting life insurance. She’s planned for one aspect of the unexpected. Unfortunately for her and many others, the chances of losing income due to an accident or sickness are much greater than dying during one’s working years.
I am a living example of the fact that a disability can happen to anyone, and that those of us who wisely bought DI can avoid financial catastrophe if a serious health condition strikes us down.
Doug WatersWest Chester, Ohio
We invite you to contact us with any questions or concerns you may have. Use our quote form below and an agent will provide you with a quote for Disability Insurance.
