The Importance of Protecting Your Income with Disability Insurance
This is arguably the most important decision financially that you will make: protecting your income. Most individuals take the time to insure their homes, auto, boat and other tangible assets against loss. Many fail to realize that their ability to earn an income is the most significant asset they have.
If you were to lose the ability to work due to an accident or long-term illness your income will stop, yet your expenses for yourself and your family continues. Disability insurance can be used to address this risk.
KEY FEATURES TO CONSIDER:
- Disability policies may be issued on an individual or group basis. Individual policies are also available through associations, professional organizations not available to the public.
- Benefit periods can vary from 24 to 60 months or to age 65 or 67.
- Non-cancelable and guaranteed renewable are important provisions to look for in a disability income policy.
- Elimination or waiting periods typically range from 30 days to one year.
- Cost of living adjustments protect against inflation, future benefits based on income only, not medical, are highly beneficial.
When talking about disability insurance the definition is what arguably is most important. There are three key definitions.
1) TRUE OWN OCCUPATION OR SPECIALTY SPECIFIC
This is where disability is defined as a condition which prevents you from performing the material and substantial duties of your specialty. Even if you are able to work in another capacity you will still collect the disability income as a non-working specialist in addition to the income from the other job.
2) TRANSITIONAL OCCUPATION
Like the previous type, if you cannot perform the material and substantial duties or your specialty you are considered disabled. However, if you earn an income your total disability benefit will be proportionately reduced based on the amount of income earned from the new job. In other words, the total new income disability benefit will not exceed the previous earned income.
3) OWN OCCUPATION OR REGULAR OCCUPATION
Again, if you cannot perform the material and substantial duties of your specialty you are considered disabled. You will only collect your disability benefit so long as you do not earn any income and are under the constant care and supervision of a physician. For those of you while in training the critical aspects are locking up some amount of coverage at an inexpensive, preferably discounted rate, allowing you the ability to increase your coverage in the future.
Any group coverage you obtain in the future will stack on top of your individual private coverage. This individual coverage will carry forward with you for all of your jobs throughout the course of your lifetime.
If you would like to learn more about this subject or receive a free quote then please contact us and we’ll be happy to help.
By Anthony C. Williams, CWS, ChFC, MRFC, CLU | Investment Advisor Representative | President & Founding Partner of Mosaic Financial Associates & Orthopaedist Advisory Group | Securities and advisory services offered through Cetera Advisors LLC, Member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor. Cetera is under separate ownership from any other named entity.