If you became unable to work due to illness or injury, how would you meet financial obligations like mortgage or car payments? Could you continue to pursue financial goals, such as saving for retirement? Even short-term disability can put your assets at risk, depleting your savings and potentially causing you to take on debt. Individual disability income insurance policies can replace up to 50 to 70 percent of your income, tax free.1
There are two main types of individual disability income policies: short-term disability, with a maximum benefit period of two years; and long-term disability, with a benefit period ranging from a few years to retirement age.
Each policy offers a variety of features and options:
Elimination Period
The time between the date of injury or diagnosis, until you start receiving benefits. The elimination period you choose can affect your premiums.
Residual Benefits
A percentage of benefits are paid based on a percentage of lost income if you aren’t totally disabled (for example, a 50% loss of income would entitle the insured to 50% of their monthly benefit).
Catastrophic Benefits
Additional coverage may be purchased to cover serious disabilities that are likely to increase your living expenses.
Rehabilitation Benefits
A policy may pay expenses for a rehabilitation program to help the disabled person return to work in his or her own occupation.
Cost of Living Adjustment Rider
Increases the monthly disability amount while on claim either at a fixed percentage or tied to increases of the Consumer Price Index.
Future Insurability Options
A future insurability option can allow you to purchase additional coverage as your income increases.
If disability insurance is not provided by your employer or if your coverage is insufficient, it may be wise to consider adding it to your financial plan. A First Command Financial Advisor can review your existing coverage, and recommend a policy with the features that make the most sense for you and your budget. Talk to a Financial Advisor today.
