How much money do you spend to protect your assets? Most individuals have automobile insurance, homeowners insurance to protect a home and its contents and, possibly, additional coverage for items or collections of particular value. These assets are, without doubt, valued at a sizable amount. However, their income-producing value is negligible.
Your true wealth comes from your ability to earn money. The money you earn most probably pays for everything from the rent or mortgage and property taxes to the costs of maintaining your home. You have food and clothing to buy, as well as loan and credit card payments to make. You must pay for the property insurance noted previously, as well as for premiums on casualty and life insurance policies. What other miscellaneous expenses do you have? If your income from employment or your business were to cease suddenly, what financial resources would be available to you to help pay your ongoing expenses?
Typical candidates for disability protection
Typically, permanent disability involves a series of hardships that results in an inability to perform certain work and daily activities for the foreseeable future. Some professions and occupations are at greater risk, and, therefore, consideration should be given to purchasing protection that has long-term income stream potential.
· Jobs requiring specialized abilities. Replacing income without disability income insurance is usually challenging; comparable pay and work conditions may be difficult to restore. Years of specialization, vocational training, experience and education are invaluable, but may become unusable resources if a disability occurs. Occupations that require physical labor are particularly vulnerable to physical disabilities. However, physical impairments are just one type of disability. Workers from all professions are likely to face extreme challenges if an emotional or mental disability affects their usual functioning.
· One- and two-income families. Not everyone has parents, in-laws, siblings or friends who might offer immediate emergency financial help or ongoing support. A one-income household is particularly vulnerable to permanent loss of income. Family situations in which each spouse covers between 30 percent and 70 percent of total financial needs may be especially impacted by the loss of one income.
· Small businesses. Particularly vulnerable are partnerships and corporations (i.e., business enterprises run by two or more owners). If disability curtails the involvement of one owner, the remaining owner either “carries” the co-owner, or the business may close. In addition to earnings lost, the disabled business owner may miss certain planning opportunities, such as preparing for retirement.
· High stress, service and production-oriented occupations. Long hours, deadlines, quotas and a fast-paced society place a tremendous burden on both mind and body. Our current emphasis on calorie control, physical exercise, meditation, relaxation and conscientious dieting are popular stress inhibitors that may indeed extend our life expectancies. However, every successful, healthy worker faces the possibility of a disabling accident or illness.
Alternative sources of income
Should you suffer a disability, you need to know where your income will come from. Would you have enough in savings to support yourself and your loved ones during a six-month disability? Do you know someone who would freely lend money to you if you were to become disabled? Perhaps your spouse can provide the necessary income, but the burden of being a spouse, parent, private caregiver and employee can be overwhelming. How quickly could you liquidate the assets you have insured so carefully?
Group and individual disability income insurance policies are available to cover most individual concerns and family or business situations. Careful planning will help steer you toward the proper coverage that addresses the demands on your current income and the needs of your family.