is More Important Than You Think
By Valerie Greene
As a young entrepreneur,
I was doing well.
I owned my
own business, lived in a beautiful
home, drove a luxury car, and was in excellent health. I worked out
several times a week with a personal trainer and was fit as a
fiddle. I never smoked, never had high blood pressure, and never
took prescriptions. The thought of being disabled never entered my
mind…until at age 30 I suffered a massive stroke and was left
paralyzed and unable to speak.
In a split second life can change,
and everything you’ve worked so hard to accomplish can be gone.
Think about your own life for a moment. Even though you’re healthy
today, what would happen to you and your family if tomorrow you
suddenly were unable to work?
How would you pay your
bills? Who would support
your family? What would happen to your business?
While most people, especially high
achieving entrepreneurs and business owners, don’t want to even
think about the possibility of a setback, the fact is that we are
all vulnerable. The only
thing that kept me afloat financially throughout my five-year
recovery was the disability insurance I had secured for myself. So
even if you think you might never need disability insurance, think
But before you rush out and buy
just any policy,
realize that not all plans are the same. As you investigate various
disability insurance policies, keep the following considerations in
Compare Definitions versus Rates: Every disability insurance
policy is different, and this is not a product where you want to
simply shop for the most competitive rates. Buying the cheapest
policy is like throwing money away. Your chances of being paid a
benefit under a cheap contract are much lower than you receiving
benefits from a quality contract. Know the exact language of the
definition of “disability.” Does the policy use the words “own
occupation,” or “any occupation” to define the definition of
disability? There’s a big difference between the two phrases.
example, depending on the carrier and the wording of the contract,
if you typically work at a desk doing computer or paper work, and
you became paralyzed from the waist down, you could still do your
job and would not be considered disabled. However, if you were a
Broadway dancer and you became paralyzed, you would be disabled from
your job. Know what you’re buying.
Your Time Limits: Aside from policy definitions, two other
factors determine your rate, and both involve time limits. Your
first involves how soon you want payments to begin after you become
disabled. The options are 30, 60, or 90 days. Base your decision on
how much savings you have set aside. If you were to become disabled,
how long could you survive on your savings until insurance kicked
in? The other time factor is how long you want to receive payments
for. The options are usually 5 years, till age 65, or lifetime. If
yours in the only income coming into the family, you’ll probably
want benefits for longer than 5 years. Choose the time span that
makes sense for your lifestyle and situation.
Educate Yourself on How Your Plan Works: Each disability
insurance policy is different, which is why you need to fully
understand what you’re getting for your money. In general, though,
should you become disabled, disability insurance will replace 45-60
percent of your gross income. Additionally, the monies/benefits you
receive can be set up on a tax-free basis should a sickness or
illness prevent you from earning an income in your occupation. Best
of all, in most cases, the younger you are when you buy disability
insurance, the less it costs, and you can lock in that low rate
forever. The only thing that increases is the amount of coverage
you’d want to obtain. That is, as your income goes up, you’ll want
to increase your coverage to cover your higher income. At that
point, your premium will likely increase.
Aware of Any Riders: Just like your health insurance policy,
which can attach riders or policy enhancements to your insurance for
non-covered items, your disability insurance policy can have riders
too. In this case, though, you can add the riders you feel are
warranted, such as cost of living increase (COLA); residual rider if
you become partially disabled; or a Social Security rider, which
allows Social Security to pay you versus the insurance company (this
will lower your premium).
Protect Your Future and Yourself: Disability insurance is
essential for any entrepreneur or business owner. Think about it…we
insure our homes in case of fire or theft; we insure our cars in
case of accidents; we insure our health in case of sickness. Since
our ability to earn an income is our greatest asset and is what
makes owning the homes and cars possible, it only makes sense to
insure our ability to work too. After all, if your ability to earn
income went away, what would you do? Life can, and often does,
change in a split second.
investigate your options for disability insurance, seek the advice
and counsel of a professional advisor who can explain the coverage
options and definitions. And always use a highly rated, established
back, I know now that purchasing disability insurance was the best
decision I ever made. Without it, I would have been financially
crippled. So take the steps necessary to protect yourself and your
income. And even though you will never want to actually use your
disability insurance, you can rest easier knowing that you have it.
Read other articles and learn more
about Valerie Greene.
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