First, what Disability Insurance is not. It's not a "Go Fund Me" account where you are dependent upon the generosity of strangers, i.e. charity. Disability Insurance, known as "DI" is something responsible people WANT to buy to protect their income, if they get sick or hurt and cannot work. It pays them a portion of their income, typically 60-80% of their income, tax-free, each month, so they can pay their bills like the mortgage or rent, the utilities like their cell phone, heat and AC, and groceries so they can eat. It can cover other things as well, like college student loans, or maintaining their family's standard of living. If you ask most people what their greatest assets are, they will usually mention things like their home or their investments such as their 401K. We think it's your INCOME, because without it, you don't have a home, you can't fund your 401K or pay for anything else. Your income is the main engine. It's the foundation to everything. It's what pays the bills. Do this: Take your annual income and multiply it by the number of years you have left to retirement. It's a pretty big number, right? And that doesn't even account for raises, promotions and inflation. If you become totally disabled and can't work to earn an income, it's gone - that's what is at stake. That number is what you are going to lose. It's up to you, but we think it's worth insuring.
There are endless statistics that clearly show your odds of getting disabled from a sickness or injury are much higher than dying because medical technology has gotten so good; they will probably save you. Here's the thing on statistics........ most people don't care about factoids, because "it's never going to happen to THEM. It's always someone else." Sound familiar? But when it DOES happen to YOU, your odds are 100%. The bottom line is this: Do you want your income insured and protected or not, YES or NO? No one likes being "sold," so we are not going to "sell" you on the need. We are here to HELP those who don't feel invincible, that are interested in protecting their income, to become more educated about how disability insurance works and to shop among top carriers and find the best, most appropriate coverage that makes sense for them. If this sounds like you, we'll probably make a good fit.
Disability Insurance is very affordable. On average it only costs about 2% of your income to protect your greatest asset - the very thing that pays for everything else. Think of it this way..... Let's say you were applying for two jobs. Which would you take, "Job A" or "Job B?" Here's your options. "Job A" is going to pay you a salary of $100,000 per year. If you get sick or hurt and can't work, you get NOTHING. Your income stops immediately and that's that. Game over. "Job B" pays you a salary that is 2% less per year, (the average cost of disability insurance), i.e. $98,000. But if you get totally disabled, it will pay you $60,000 per year, tax-free until you retire at age 65. Which job would you choose? If you chose "Job B," we're here to help you figure out which income protection plan is best for you.
But what if you don't get disabled? What if you end up dodging a bullet your whole life and never end up needing it? Some policies have a "win/win" available. It's called a "Return of Premium" rider, or "ROP" for short. It's an added expense, but what it means is if don't actually get disabled, you get all premiums back, a 100% REFUND of your premiums paid, minus any claims that may have paid you along the way. It's peace-of-mind and coverage if you need it - all your money back if you don't. It's less expensive to add that feature the younger you are when you buy it so get it as early as possible. It's available from age 55 and under. If you're older than that, just get the regular type of disability insurance without it.
Short Term Disability, or "STD" is just that. It's coverage to protect your income for shorter periods of time, typically no more than 2-5 years. It has the shortest elimination period, which is how long you have to wait until you actually get paid; it kicks in the fastest, pays the soonest, 30-60 days, depending on the policy. STD is best for people without much savings to fall back on if something happens. They realize if they get sick or hurt and can't work, they'd be in a hurry fairly soon. American's, overall, do a poor job of saving and many people would not be able to go very long before running out of money. STD is the solution.
Long Term Disability, or "LTD" is what it says and is designed to protect your income over a long period of time, essentially the remainder of your working years, if needed, all the way out to 65, 67, or even 70. It's for the "game changer." It's for the disability that ruins being able to do what you do. People who buy it, usually have either some form of STD in place, or they already have a fair amount of savings built up, usually 90 days to six months and feel they can handle the shorter term stuff on their own already. They are concerned about a bad one that goes the distance, or over a longer period of time. It's also almost always selected by professionals with a certain set of special skills, like a doctor or dentist who realizes they can't do surgery if they have Parkinson's for example.
If you ask most people, what their greatest assets are, they will usually mention their home, and 401K or other "things." Consider this:
If you had a goose that laid golden eggs - would it make more sense to insure the GOOSE.......... or the eggs? The Goose, right? But what do most people do? They insure their eggs, their "things" the house, cars, etc. YOU are the Goose. Your earned INCOME is what pays for everything important in your life.
Take your annual income and multiply it by the number of years you have left to retirement. It's probably a pretty big number. That's what's at stake if you get totally disabled and cannot work to earn an income.
Doesn't it make sense to INSURE your INCOME, your greatest asset?
Sean Cresap is one of our top, most valued clients. Sean "gets it." Watch him share how he feels about the importance of using disability insurance to protect his income, his income, his family, his business and employees, and how he feels about working with us at Radwick Financial Group.
Check out this great video by Illinois Mutual Life! Great music also. If you're not bobbing your head and tapping your toe, there's something wrong with you.
Check out this great video by Monica Soltes, telling her story about the impacts of being disabled and things most people haven't considered. Monica wants her story to help others.
Another great little video on Income Protection by Principal Life
At the very MINIMUM, get the "MUG" plan to cover the basics: The Mortgage, Utilities and Groceries. Don't lose the house, keep it warm in the winter, cool in the summer, keep your cell phone on and the fridge and pantry full of groceries so you and your family can eat.