TUESDAY, APRIL 3, 2012
While most of us understand the need to insure our cars and homes, many do not consider insuring what pays for those things… our paychecks. It is crucial to understand the importance of properly insuring your paycheck with disability insurance. Here are answers to six of people’s most pressing disability insurance questions:
1. Where does disability insurance fit within my financial plan?
Disability insurance is there to protect your income, should you become ill or injured and unable to work. In essence, it protects your paycheck. Your financial plan needs to begin and end with income planning. Unless you first protect your income, there is no financial plan!
2. What about disability insurance through my work—isn’t that enough?
That’s called group disability insurance. With this particular coverage, you are just a tenant. You are not in control because you do not own the policy. It can be taken from you in an instant; your employer may give it up or the insurer may decide to stop insuring the group. You are at their mercy.
Plus, 70% of employers don’t offer long-term disability insurance at work, which means if you do have coverage, it’s probably short-term disability insurance, which would not help you meet your financial obligations if you were sick or injured for an extended period of time.
Also, keep in mind that group long-term disability insurance typically only covers your base salary, so bonuses, commissions, incentives, deferred compensation, stock options and pension contributions are generally not covered. In most claims scenarios, people are very disappointed with the adequacy of their group disability coverage.
3. How does disability insurance differ from long-term care insurance?
Simple. Disability Insurance pays you and long-term care insurance typically pays someone else who is providing the care service.
4. How does disability insurance differ from life insurance?
When it comes to income replacement and asset conservation, there is no difference. The difference between disability insurance and life insurance is you’re either above or below six feet of dirt. The main concept to think about is that the chances of becoming disabled are much greater than dying prematurely.
5. How much disability insurance should I have?
You should have as much disability insurance as possible. No less than 65% of your gross income is considered adequate. I’ve not met anyone who is receiving disability benefits that has said that their benefit is more than enough. Unfortunately, when you’re disabled, the truth is always the opposite; there is never enough money. That’s why supplemental disability insurance is often necessary to adequately protect a person’s income. You can get a working idea of how much you might need here.
6. Where can I get disability insurance?
A good financial advisor or insurance agent will always offer disability insurance, so that should be a clue when choosing an agent.
Our agents at Insurance Planning Service are ready to help you asses your disability insurance needs. Call us today at 800-220-5582 or use our online contact form.
Source: LIFE Foundation
MONDAY, APRIL 2, 2012
Decades ago, once you turned fifty, your were issued your AARP card and you could retire peacefully. Nowadays, the odds of any of us being able to retire at age fifty are slim to none. Just because you can't retire at that age doesn't mean that you can't go over some important documents and figures to look forward to your retirement.
Make sure your retirement planning is on track. Hiding your head in the sand because your 401(k) took a hit over the past several years is not a retirement plan. While it may be painful to dissect what you currently have and what you need to save (probably much more than you are), it’s better than the alternative: living in poverty in retirement.
Review your life insurance coverage. Rates for life insurance have come down recently and it is often less expensive now than it was 10 years ago. Sit down with an agent to make sure you’re not overpaying for your coverage and that you have appropriate coverage for your risks.
Explore long-term care insurance. It’s important to understand that this isn’t “nursing home insurance”—80% of people who need long-term care services are receiving them in community settings, which for many of us will be our home. Long-term care insurance protects against the significant financial risk (aka draining your retirement funds) of potentially needing extended care services, at home or in a facility, due to a chronic illness or disability.
Examine your estate plan (or get one if you don’t have one). I know this is daunting, because it is for me, too, and I’m in this business. Keep in mind that the plan you had in place 20 years ago (when choosing a guardian for your children was key) needs to be reexamined. Now it’s about more about managing your assets, mitigating estate taxes and debt. Your advisor may be able to help you with this, or can refer you to someone who can.
Get your legal documents in order. Make sure you have durable power of attorney, which is a legal document that gives someone you trust the ability to act on your behalf if you were to become disabled or incapacitated. In addition, make sure you draft a health-care directive, which gives instructions about medical treatment if you were terminally ill or permanently unconscious.
If you need help putting together a checklist, get in touch with your insurance agent at Insurance Planning Service to discuss your post-fifty plan. Call us today at 800-220-5582 or use our online contact form.
Source: LIFE Foundation