What would happen if your income stopped. Without a paycheck, how long could you pay your rent and utilities, buy groceries, make student loan payments, etc.? How many of the “extras’ that you enjoy in life would you need to give up? In all likelihood, your financial future would be thrown significantly off course.
A strong financial plan must not ignore this possibility. Having a “that won’t happen to me” attitude puts a lifetime of hard work and planning at risk. Most disabilities (about 90%) are caused by various illnesses including cancer, mental disorders, heart disease. Some of the most devastating experiences in life are often out of our control. For instance, according to US Savings and Trust 48% of all foreclosures on conventional mortgages are due to owner disability, while only 2% are due to owner death.
Disability income insurance (DI) can help replace a portion of your income if you become too sick or hurt to work. It provides a buffer against the unexpected. DI provides income that can be used to help keep your household running as you adjust to your new circumstances.
DI policies come with many different “riders” or features to help customize your policy. Ask your financial planner to help you understand the many features offered to ensure your policy is specific to your needs. Here are some common terms you should make sure you understand when customizing your policy:
- Total Disability
- Own Occupation / Any Occupation
- Non-cancellable / Guaranteed renewable
- Residual Income
- COLA
- Elimination Period
- Benefit Period
Once you’ve decided to help protect a portion of your income, the next step is to make sure your policy fits your needs. Whether or not to obtain DI is a personal decision, but once you have made it be sure to seek the advice of your financial planner or reputable DI insurance agent. You want to be sure that you have a strong understanding of your policy and can rest assured that you have adequately protected the people and assets that are most important to you.
Luke Gawronski is a Financial Planner with the Barnum Financial Group in Shelton CT. He can be reached at lgawronski@barnumfg.com or [tel #].Luke is a registered representative of and offers securities, investment advisory and financial planning services through MML Investors Services, LLC. Member SIPC www.sipc.org . 6 Corporate Drive, Shelton, CT 06484, Tel: 203-513-6000.CRN202701-10779997