Disability Insurance, Simplified
Disability Insurance is often overlooked by many people, including other Financial Advisors. Some think
it is too complex to understand, too difficult to collect on a claim, or too hard to be approved for. There
were times when Advisors had to go through a 17 page application form, and then cross their fingers
hoping that the client would be approved. Consumers didn’t know what they bought at purchase time,
and sometimes had challenges at claim time. Well, that was then.
Today, there are programs that are Guaranteed to Issue. What does that mean? Well, if you are
actively working, and not currently hurt or disabled, then you qualify. Disability Insurance is a little
different than life insurance. It is a living benefit. Most people, if they had to, could quickly figure out
their outstanding mortgage, any other consumer debt, and make a decision as to how many years of
income would be required for their spouse or family to readjust, and come up with a number. In essence,
this number is how much life insurance they would purchase. Disability insurance is the opposite. Most
people have an idea at what age they would like to retire, however, they may need to work much longer.
Say for example, for round numbers sake, you are earning $50,000 per year. If you were in a car
accident and became permanently disabled, where would the 30+ years of income come from? Quick
mathematics says that is almost $2 million of income that would be required!
There are a few important things you should consider before purchasing such a plan. First, if you were
hurt, how long would you be paid? Many plans will cover you to age 65. However, if something serious
happened, the money could run out in 2 to 5 years. Why, because you only had a 2 to 5 year benefit
payment period. There are other plans that will pay until age 65 or even age 70.
Second, how long will you have to wait before you are paid? Most plans have some type of waiting
period. So, you