The Paycheck Protector I Why Disability Insurance Matters

Imagine that there is a printer that prints hundreds of thousands of dollars each and every year. What would be the best way to ensure that the printer never stops printing? A wise person would have extra paper, extra toner, spare parts, surge protectors and even a backup generator to make sure that there is never a lapse in the production of money. The reality is that every working person IS that very printer for their families and themselves. Each year, every working person creates money for their family by showing up to work and doing the tasks that are required in order to continue the flow of money into their accounts. What does one do to make sure that the income flow never stops? How do they make sure that their printer continues to produce money? That is where disability insurance comes in.

Understanding Disability Insurance

Disability Insurance is an insurance that replenishes a person's income in the event that they were to become disabled and unable to work. Below are some important things to know about disability insurance and why most Americans are under insured for this protection and most importantly, how to fill the gap.

1. Here's Why Disability Insurance Matters

The chance of going on a Disability claim in someone's working years is one in four! The prime "working years" is from 18-65. So from college through retirement, most people have a little over 40 years to not only provide for their current needs but also save for their retirement years. The 25% chance is an extremely high likelihood that someone at some point will need disability insurance. Again, if there was a 1 in 4 chance that the printer would stop printing, every reasonable person would get that protected.

1. Covering Your Income When Life Doesn't Go as Planned

Most employers offer group disability insurance...but it IS NOT enough! This is vital to the protection for every person's future. Most employers offer, as a employee benefit, up to 60% of the employee salary in Long Term Disability protection. However, since it is a employer paid perk, it is taxed at the normal tax rate. Meaning, the person who is in the 20% tax bracket would see the 60% feel like less than half of their normal salary. That is a significant shortfall and would not only put a stress on their finances but also stall any savings for the future.

1. Ever Wondered What Disability Insurance Actually Covers?

Rarely. Insurance companies know that if a person was making their same paycheck without working, most people will gladly enjoy that "paid vacation for life." Net of taxes, the most that an insurance company will allow for the insured to qualify for up to 85% of their take home income.

1. Protecting Your Paycheck

Sometimes. Most employers will allow an employee to purchase additional insurance at a lower group rate. However, it is "aged banded" meaning at certain blocks of ages, like 40-50, the rates are the same but go up at each age block. They will not allow 100%, but maybe up to 70-80% of their salary. The good news is that the policy is very affordable and that portion is tax free since the employee pays for it. However, it is not transportable which is discussed later.

1. Let's Break Down Disability Insurance

Sometimes. There are different types of disability insurance. One type of coverage can include "own occupation" protection. For example, if there is a surgeon who is protected and they get arthritis and can no longer perform surgeries, they can receive their disability insurance since they can no longer perform surgeries. However, they may be able to become a general practitioner or teach as a professor at a med school. Since this person can no longer do their protected occupation, they can receive both the disability income and income from their new job occupation.

1. Understanding Disability Qualifications

Maybe. It is short sighted to think that disability is only limited to losing the ability to use one's legs and confined to a wheelchair. According to CDC and SSDI statistics, the vast majority of Disability claims are from illnesses (like cancer and mental health issues) and not accidents. Over one quarter of the claims are "muscular skeletal" issues like back and joint pain. If anyone has ever had a herniated disc or severe back pain, they know that the ability to focus on work is limited due to pain.

1. The Many Faces of Disability

As mentioned before, group policies are beneficial because they are lower priced but they are also "guaranteed issued" meaning that the insurer covers everyone without additional underwriting. However, it is not transportable. According to business news daily, the average millennial will work in 3 to 4 jobs before settling into a career and are projected to work in 12-20 different jobs before retirement. According to transnationalstaffing.com, Generation X only stays in one job for less than 8 years before finding a new one. Every time someone changes jobs, they take the risk that they won't have the same disability benefit and if there is a health event, they are unable to get disability insurance going forward. If someone has a separate personal disability policy, they are able to take it with them wherever they go as long as they pay their premiums.

1. How to Get Disability Insurance

For starters, talk to a financial advisor to find out how much coverage is needed to maintain and protect their financial goals. They should be able to help find a company and policy that fits the financial plan. The underwriting process is both health related and financial. They insurance company wants to make sure that they are not over insuring someone who doesn't qualify financially and they want to make sure they aren't taking on someone who has health issues. Once the policy is issued, these policies will protect someone through their working years.

Protect Your Most Valuable Asset—Now

Now is the perfect time to protect the printer that generates hundreds of thousands of dollars each year—you.

Contact us today. If you don't already have coverage in place, click the link below and a member of our team will reach out to help ensure your family is fully protected.

Source:

https://www.businessnewsdaily.com/7012-millennial-job-hopping.html

https://transnationalstaffing.com/employees/how-long-do-employees-stay-at-their-jobs-breaking-down-job-tenure-by-generation-and-age-group/