What is Disability Insurance Awareness Month?

Jerry C. Thomas, CFP®Disability Insurance Planning

Many people and even some insurance professionals may not know that May is Disability Insurance Awareness Month!  However, that’s exactly why it exists, to inform not only individuals and businesses, but also professionals in the industry about disability insurance planning.  The Council for Disability Awareness works with those in the insurance industry to help raise awareness about the importance of disability insurance planning. Another name I use to describe disability insurance is Paycheck Insurance! Above all, we want to help illustrate stories that help understand the importance of disability insurance planning. Furthermore, how it can help your family financially and emotionally by reducing stress due to a loss income.

How can disability insurance protect you and your family?

Look on Facebook right now, how many people do you know who are battling cancer, at home due to an accident, or taking care of a loved one who is sick?  We all know someone in this scenario right now.  I’m 32 years old and I counted 8 people on my Facebook feed who experiencing this right now.  Likewise, how many of our friends and loved ones in this scenario still have bills, mortgages, car payment, utility bills, and yes even an iPhone bill to pay! Furthermore, who pays their bills if they’re not working? Meanwhile, how many of them are still getting a pay check from their company if they have been out of work for 3 months, 6 months, 1 year, or even longer? 

After you use up your sick-time, vacation time, of PTO if you don’t have long-term disability insurance, your company will not continue your paycheck.  In addition, a GoFundMe account will only provide so much income and usually only for a short period of time.

Below is Dore’s Story

Not sure if disability insurance may help you? Watch the video below to learn about Dore’s Story.

7 Commonly asked questions about disability insurance planning.

  1. What is disability insurance?
    • Disability insurance is a type of insurance that will provide income in the event a worker is unable to perform their work and earn money due to a disability.
  2. Where can you obtain a policy?
    • Group (Employer): through your work.
    • Personal: through an insurance professional.
  3. How much coverage will it provide?
    • Most of the time your coverage will be anywhere between 50%-70% of your income.
  4. How do group disability insurance policies get taxed?
    • Any benefits received from a group disability insurance policy will be taxable as ordinary income. This is because your employer paid the premium and you never paid taxes on this benefit.
  5. How do personal disability insurance policies get taxed?
    • Any benefits received from a personal disability insurance policy are received tax free. This is because you used after taxed dollars to pay the premium.
  6. What’s the difference between own occupation and regular occupation disability definition?
    • Own Occupation: Will cover you for what you specifically do
      • Example: Neurosurgeon injures their hand and can no longer perform surgery but can go back to teaching, own occupation would consider them fully disabled.
    • Regular Occupation: Will cover you if you can’t do any job not what you are specifically trained to do.
      • Example: Neurosurgeon injures their hand and can no longer perform surgery but can go back to teaching, regular occupation would consider them non-disabled.
  7. What’s the best disability policy?
    • The one you have in place when you become disabled!
    • No one company or policy is the best. The most important thing it to work with a disability insurance specialist to help you determine which one is best for you.

4 Things you should review regarding your disability insurance policy.

  1. How long will your benefits last? (3-Years – Retirement Age)
  2. What is the definition of disability? (Regular Occupation vs. Own Occupation)
  3. Is there a residual benefit if you can only work part time? (Partial Benefit for Partial Work)
  4. Is it competitively priced?

What should you look for in your disability insurance advisor?

  • Are they a specialist in disability insurance planning?
  • Do they have a designation (CLU® or CFP®)?
    • Being a specialist is more important, but knowing they are educated helps build trust.
  • Are they showing you multiple options?
    • As an experienced CERTIFIED FINANCIAL ADVISORTM presenting multiple solutions or quotes helps let the client know you have reviewed multiple options and are advising the client vs. selling the client.
  • Do they understand how different disability definitions impact your ability to qualify for a claim?
    • (Own Occupation vs. Regular Occupation)

How should you and your disability insurance advisor work together?

I recommend using the following process.  This is the process we use, six-step financial planning process.  It helps keep everyone on track and lets you know what to expect at each stage.

  1. Define your Relationship:
    • What are each of your expectations?
    • Be specific, if you want every option available, let your advisor know.
    • If you have a budget let your advisor know at the beginning.
  2. Gather Data and Goals:
    • If you leave important medical information or financial information out of the conversation there will be a lot of wasted time when the information is later discovered during underwriting.
    • If you have specific goals, this is the best time to review them.
  3. Analyze and Evaluate
    • Your advisor will review the above information to piece together a plan by analyzing your group and individual policies and important medical and financial considerations.
  4. Present Recommendations and Alternatives
    • Here is where you will be presented the solution or quotes.
    • You will usually see 2-3 options.
  5. Implement the recommendations
    • This is where you sign the application and begin the underwriting process.
    • Depending on the amount of coverage you may or may not have to take an exam and provide financial information.
  6. Monitor Recommendations
    • As your needs change, you will want to conduct annual updates to make sure benefits stay up to date.

Conclusion

Disability insurance helps you and your family in the toughest of times. Our family has experienced this firsthand.   We know how a disability insurance check can help a family. It helped keep my aunt and her family when her husband was receiving care for a non-curable sickness.  She was able to take care of her husband and use their disability insurance to pay the mortgage, utilities and living expenses.  When her husband passed away after receiving disability checks for 8 years, she was able to pay off the mortgage, fund their son’s college, and plan for her retirement using the life insurance policy he had purchased prior to getting diagnosed.

If you want to learn more or need help reviewing an existing plan, we can help you. Awareness is the first step the second step is having a plan.

How can we work with you?

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