This should be the first and foremost concern for professionals. For most individuals, the ability to earn income is their most important and valuable asset. Without the income to fund the creation of wealth, investment returns and asset accumulation become moot issues. Thus, it is paramount to begin the financial planning and wealth management process by protecting one’s income stream from the unpredictable and most devastating financial occurrence that can strike; a lengthy disability from illness or injury. Furthermore, given the vital importance of the asset being protected – income stream – the form and quality of insurance protection sought is an extremely serious and critical decision.
Why Do I Need Long-term Disability Insurance?
Long-term Disability Insurance is designed to protect about 60% of your earned income should an accident or illness prevent you from working. It is an income replacement plan that protects your most valuable asset—your ability to earn a living. In fact, if you think about it, your earning power is the one asset that allows you to have all the others.
Ask yourself this: if you were sick or injured and could not work, what source of income would you have to pay your personal and/or business expenses? Would you be draining resources needed for your retirement?
The Real Cost of Disability
Your income is doing a double job—it provides you with the cash you need for basic necessities and luxuries as well as money you can use for saving and investing for your future. What would happen if you became disabled?
- You would still need to pay for the basic necessities of life.
- Retirement plans and children’s or grandchildren’s education funding would need to postponed, if not forgotten altogether.
- You would have to do without some, perhaps all luxuries, yet you would still be responsible for fixed expenses such as a mortgage, car payments, insurance premiums, and loan or credit card payments.
If you think it’s tough living within your income now, have you ever wondered how you would be able to live if it suddenly stopped?