Insuring Your Income-Earning Ability

INSURING YOUR INCOME-EARNING ABILITY

WHAT YOU NEED TO KNOW ABOUT DISABILITY INSURANCE

Have you ever thought of how you would pay your bills if you were injured or sick and unable to work? You've probably insured your car, your health and your life - but have you insured your paycheck? A disabling illness or accident can bring your earned income to an abrupt halt...crippling your family's financial security in an instant. That's why millions of Americans own disability insurance--to replace their incomes if they're unable to work.

WHAT Is Disability Insurance?
If you cannot work due to an illness or accident, disability insurance can pay you a monthly benefit, replacing a portion of your income (generally up to 80%, depending on the individual policy) for as long as you are disabled, up to a maximum time specified in your policy.

WHO Needs Disability Insurance?
If you and your family count on your income to maintain their standard of living, you should consider disability insurance.

HOW Does It Work?
Most disability insurance policies can be tailored to your individual needs. When you purchase your coverage:

You select your monthly benefit, generally up to 80% of your income. So, if you earn $5,000 a month, you can replace up to $4,000 under many policies.
You select a waiting period. This is the length of time before benefits are paid after a disability starts. Waiting periods generally range from 30 days to six months.
You select the benefit duration. Some policies will pay benefits for a specific period of time, such as two years. Others provide them to age 65.
You should be aware of the "definition of disability" in the policy. Some policies pay benefits only if you are unable to work at any employment. Others pay benefits if you are unable to perform the primary responsibilities of your occupation.

Taxation of benefits: If your employer pays your premiums, your benefits will be treated as taxable income. If you pay the premiums out of your own pocket, however, your benefits will be tax-free.

WHY Should I Find Out More?

1. The risk is greater than many people realize. According to actuarial tables upon which insurance rates are based, a woman between age 30 and age 65 has a 54% risk of suffering a long-term disability (one lasting more than three months). The odds are slightly better for men -- 43%.

2. Social Security will not do the job. The average disability benefit in 1999 is just $750 a month.

3. Disability insurance provides peace of mind. In exchange for a regular premium payment, you receive the assurance that benefits will be paid if you become disabled under the terms of your policy. It provides cost-effective protection for your most valuable asset -- your ability to earn an income.

1 - 1985 Commissioner's Disability Table.
2 - Social Security Administration, 1999.

DISABILITY INSURANCE IN ACTION: ONE EXAMPLE

At age 30, Kent was earning $30,000 a year. He purchased a disability policy with a $2,000 a month benefit (80% of his income), payable to age 65. He was diagnosed with multiple sclerosis at age 35 and, by 40, was no longer able to work.

Kent turned 60 last November and is now almost completely incapacitated. However, he continues to receive a check, tax-free, each month. His total benefits have come to more than $480,000. While his $2,000 a month in insurance benefits and $800 a month in Social Security have not made him rich, his family has been able to stay in their home and maintain their lifestyle.

WHERE Can I Get More Information?

Give me a call. I am willing to meet with you to answer your questions and discuss your options regarding disability insurance. There is no obligation.