If you are interested in statistics I would encourage you to look them up on the internet but instead of focusing on them, I would like you to forget about them. If it happens to you, your chances are 1 in 1. At that point the dice has been rolled and you will have to face the realities of what comes next.
I speak from experience when I say I know what that dice roll feels like. I was 30 years old with two small children when I was diagnosed with Kawasaki’s disease. The illness came on unexpectedly and fast and left me in the intensive care unit for 10 days.
In dealing with my illness and those big, scary possibilities of death or disability, I was faced with many questions and doubts. Amidst all of that, I gained so much comfort in my personally owned life insurance and disability income policies.
Here, I want to share with you the lessons I learned about the importance of being protected.
Lessons Learned:
1. Own Your Own Policies
Own your own life insurance and disability income policies to give you the peace of mind you will want to have. Don’t rely solely on your employer provided benefit package, or on Social Security. I bought my own insurance policies at 18 years old, which provided me with comfort when faced with uncertainties surrounding my work performance through the illness.
2. Understand The Definitions
Look at the definitions of disability offered by a personally owned contract, your employer provided coverage and social security. You will see a bunch of differences. Why do you think we see so many television commercials that claim will help you receive Social Security benefits? From what I know most claims are denied the first time around.
3. How Far Will Your Paycheck Stretch?
How long can you go without an income? Do you have an emergency account to give you at least enough income to pay the mortgage and put food on the table for each month you’re not able to work?
That helps you understand the length of the elimination period that you need to have in a personally owned disability income insurance contract. Keep in mind your employer plan will usually require you to first use your sick leave and your accumulated vacation as part of the elimination period before you can receive benefits.
4. How Long Will Your Employer Pay?
Most employer sponsored plans are short term in nature. Once you qualify by completing the elimination period, how long will your employer pay? Or in other words, what is the maximum period? What income will they base the payments on? It makes a difference based on your employee status.
If your employer offers a company plan and if the company is paying for that coverage, those premiums are usually made by the company on a pre-tax basis, which means that the disability payments that come to you are considered to be taxable income to you. That reduces your discretionary income due to the taxes due on the payment. If you own your own personal coverage, then premiums are paid with after-tax dollars and therefore the amount of payments received are tax free, which is a big difference in what you have for spending each month.
5. Have Personal Safeguards
Don’t count on prolonged support from your family or friends. While it is difficult to say ‘don’t rely on your family or friends,’ their support won’t last forever. After all, they have their own financial obligations. They will do what they can but you need to be realistic about what safeguards you have on your own.
At the end of the day it is up to you to determine the coverage you may or may not need. Consult with a professional who will help you determine the extent of your risk and costs involved to give you the comfort you will need.
The best thing that could happen is that you have the coverage and never need to use it.
That peace of mind is priceless. I know, I have been there and done that.
[1] http://www.disabilitycanhappen.org/chances_disability/disability_stats.asp
Writen by Doug Ahrenstorff
This blog post is from the Author's perspective and doesn't speak for brightpeak financial. Contact brightpeak if you want to know more about brightpeak products, and keep in mind that they are not available in all states and there are some limitations (some exclusions and restrictions may apply).
