Why you need it, and if you already have it, why you need to know what you’ve got!
Part 1: Protecting Your Most important asset
Imagine you’re doing everything right.
Good paying Job? Check!
Keeping within your household budget? Check!
Adequate Life Insurance to protect your children and family? Check!
Working with a Financial Planner on your financial plan for a comfortable retirement? Check!
Maximizing the retirement plan at work while saving a little extra every month? Check!
You’re doing everything you’re supposed to do. Your financial plan feels complete. You sense that your family is on its way to meet all of your short and long-term goals!
Then one day, you feel sick. Not a problem, you think, you’ll get better eventually. Time goes by, but you don’t get better. Pretty soon, you can’t work.
Unfortunately, the one item from your plan you chose not to implement was the one you felt was not worth the cost; disability income insurance.
And it wasn’t just the cost. You figured nothing would ever happen to you because you were young and you feel fine. Disability only happens to other people.
So you never acted on the need….
Now you come to realize that your most valuable asset is not your home, not your 401k, and certainly not your car or any of the other stuff in your house. Your most important asset is your ability to earn a paycheck!
Yes, you had emergency savings for a possible job loss of a few months, but you never thought you wouldn’t be able to work for any length of time due to a disability. Now that there is no income from your job, your paycheck has had a 100% decrease.
If you figure that the average breadwinner for a family can earn millions of dollars over their working years, this is an enormous asset to leave unprotected. Simply put, this is a catastrophe for you and your family.
So, your family will cope if this happens, you say. Maybe your spouse can go back to work or work more hours. But can they make up all of your lost income? If they are reentering the job market after many years, what do their prospects look like? Who takes care of the kids? Also, God forbid your disability is due to a terminal illness. Do you really think your spouse is able to, or has a desire to work so many hours if your remaining time together is limited?
What about Social Security Disability payments? If you do qualify to receive a benefit (Social Security can often be stricter than an individual policy on handing out benefits) the average Social Security Disability Payment in December of 2013 was $1146 per month. That’s an income of less than $14,000 per year!
So the scenario above is bleak. But it is not as uncommon as you think. According to the Social Security Administration, Just over 1 in 4 of today’s 20 year olds will become disabled before they retire. Also, Accidents are not the main reason for disability; illness is. You can find more excellent statistics and examples from the Council for Disability Awareness, and more on Disability can be found at https://conestogawealthmanagement.com/medicare/.
Look at it this way: If you purchase Disability Income Insurance and you never have to use it, you made a minor error. However, if you didn’t purchase Disability Income Insurance and you end up becoming disabled, you have made a catastrophic and likely irreversible mistake!
The fact is that few people expect to be disabled, but the statistics tell a different story. Any successful financial plan needs to incorporate this paycheck protection. Remember, your paycheck is likely your biggest asset!
You can contact us to help you find the right policy for you at https://conestogawealthmanagement.com/contact/
In Part 2, we will help you understand what’s in a policy and what to look out for
