Disability - Income Protection Insurance, by Paul M. League,
QFP, CFP®
Disability can strike anyone, anytime, regardless
of age or, type of job. If it does happen to you, a disabling illness or injury
can seriously effect your ability to work and earn an income, which will
obviously cause significant disruption to your financial security.
2 Very Important Questions To Ask Yourself
Now - Before You Are Disabled!
-
If you have trouble living within your income
now, how could you afford to live without any income, especially if you were
disabled from an accident or serious illness?
-
Are your home and car better protected and
insured than your most valuable asset; namely, your income?
Remember, your most important asset is
your income AND your ability to earn an income. In cases when you are
prevented from doing so, such as being disabled from an accident or serious long
term illness, this type of coverage can and may literally "save the day" for you
and those closest to you based on the benefit guarantees of the insuring company
and timely payment of plan premiums.
"INCOME PROTECTION INSURANCE," is a form of Disability Insurance that
protects you by replacing lost income (usually up to approximately 50-60% of
your income prior to disability), and therefore goes a long way in increasing
your financial security in the event of a disability. These plans are normally
available for the following benefit periods: 2, or 5 years, or to Age 65. After
Age 65 plan coverage can usually be continued for those working full time to Age
72-75. Benefits on most plans can start to be paid after a waiting or
"Elimination Period" that can be 30,60, 90, 180, or 356 days (waiting periods
and benefit duration depend on job classification as well as income and health
considerations).
For owners of businesses there is a form of Disability Insurance called
"BUSINESS OVERHEAD PROTECTION" and this, unlike personal Disability Insurance,
does not insure Income but instead insures overhead & operating expenses of your
company and all employees salaries except your own. Plans of this type are
normally bought with a shorter waiting period (typically not more than 30 days)
and with shorter benefit periods (typically 12-24 months). These plans are
designed to relieve the pressure of a disabled business owner long enough for
him to determine whether or not the disability will be long-term or permanent or
short-term. If the disability will be long-term then owning such coverage gives
the insured business owner time to either replace himself or sell the business
to rid himself of the otherwise ongoing financial liabilities & overhead
associated with running the company.
Companies also often purchase for their key
personnel and rank and file employees, a form of Disability Insurance called
"LTD" - Group Long Term Disability Insurance.
LTD is an excellent and cost effective way to acquire such insurance and to be
covered with during your employment years.
Finally, in terms of overall life planning, It is also important to establish a
personal emergency fund equal to at least 3-6 months income/expenses, so that
you are adequately protected for otherwise short term emergencies.
Beyond these measures, a structured
savings/retirement program, with investments suitable to your personal needs and
objectives, should be established out of current earnings without delay.
Disclaimer: The material discussed
herein
is meant for general illustration or informational purposes only and is
not to be construed as investment advice. Although the information has been gathered from sources believed to
be reliable, it is not guaranteed. Please note that individual situations
can vary; therefore, the information contained herein should be relied upon only when
coordinated with individual professional advice. We are not licensed for
and therefore do not provide tax or legal advice.
About
the Author: Paul M.
League, QFP, CFP® is the Founding Principal of both League Financial & Insurance
Services (www.LeagueFinancial.com) & League Financial Services (www.LeagueFS.com),
which are privately held companies
located in Palm Desert, CA.
Paul and his companies specialize in assisting clients to
create, expand & preserve assets. Contact Information: Paul M. League, QFP, CFP®, P.O. Box
11800, Palm Desert, CA 92255-1800 · 800.482.5347 ·
Info@LeagueFinancial.com.
©Paul M. League. All Rights Reserved.
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