Disability Insurance
Why is disability insurance important?
Your ability to earn a living is your most important asset. And one of the best ways to protect it is with disability insurance. Think of it as insurance for your paycheck. Disability insurance provides a percentage of your income if an illness or injury prevents you from working and earning a living. You do not hesitate to insure your home, car, and phone, so why wouldn’t you also protect what pays for all those things—your paycheck?
Do I need disability insurance if I work?
Disability insurance is something anyone who works and has earnings should consider. That is because one in four people (1:4) today will become disabled¹ and potentially face financial hardship at some point during their working life. Disability insurance income helps cover expenses if you can’t work because of an illness or injury. There are disability insurance policies tailored to workers in specific professions and disability insurance for self-employed individuals.
What are the types of disability insurance?
There are two main types of disability insurance: short-term disability insurance and long-term disability insurance. Short-term disability insurance covers lost income for about three months, while long-term disability insurance typically pays a portion of your lost income for anywhere from one year to your entire life.
How much disability insurance do I need?
You can calculate how much disability insurance you need by adding up your monthly expenses. Then add up how much disability insurance you already have and any personal savings you could draw on if you could not work. If that number is less than your monthly expenses, consider buying more disability insurance.
How do I get disability insurance?
The main ways to get disability insurance are through your employer, professional organization, or your own. Buying disability insurance through an insurance company is typically the most flexible and reliable way to get coverage. A licensed insurance agent can get you a disability insurance quote. You may also be eligible for government disability benefits—be aware that they are usually insufficient to replace your lost income.
How much does disability insurance cost?
The cost of disability insurance depends on several factors. Some include your benefit amount, benefit period, occupation, health status, age, and policy terms. Generally, the disability insurance cost for a long-term individual policy is 1% to 3% of your annual salary.
How do I receive disability insurance benefits?
You could file a claim to receive disability benefits through your employer’s human resources department if your policy is through work or your licensed insurance agent if you bought the policy on your own. To receive disability insurance benefits, you will have to meet the disability definition as it is defined in your policy. There may also be a disability insurance elimination period, which is a waiting period that can last anywhere from a few weeks to a few months before you can receive benefits.
Life Insurance
What is life insurance?
The Basics of Life Insurance are the opportunity to protect your most important asset, your loved ones. They are putting a plan to cover life’s expenses and secure their long-term financial future. Benefits could be used to the loved ones’ lifestyle, pay off debts such as mortgages and other obligations to children’s college, and leave a legacy.
Why is life insurance worth it?
There are many answers to the question of why life insurance is essential. But by and large, the most important one is ensuring your family’s financial security and peace of mind.
If anyone depends on your income, they will most likely struggle if you were to pass away. That is why life insurance is so important to have. There are different life insurance policies, but they all pay cash to your loved ones when you die. Life insurance can cover daily living expenses, mortgage or rent payments, outstanding loans, college tuition, and other essential costs. Life insurance is the best way to ensure that your loved ones would be in a good financial place if you and your income were no longer in the picture.
What does life insurance cover?
Life insurance covers any living expense. Some everyday expenses include:
- Immediate Expenses
- Funeral and burial costs
- Uncovered medical expenses
- Mortgage or rent
- Car loans
- Credit card debt
- Taxes
- Estate settlement costs
- Ongoing Expenses
- Food
- Housing
- Utilities
- Transportation
- Health care and insurance
- Continue a family business
- Future Expenses
- College costs
- Retirement
Do I need life insurance?
If someone depends on you financially, you most likely need life insurance.
Life insurance provides cash to your family or loved ones after your death. This cash, the death benefit, replaces your income and the many non-paid ways you support your household. Your family can use this cash to pay for expenses like funeral costs, a mortgage, college tuition, etc.
Just a few examples of people who often answer “yes” to the question of “Should I get life insurance?” include:
- Married or partnered couples.
- Many partners find it difficult to make ends meet without the other earner’s income in the picture.
- Married or partnered couples with kids.
- In addition to losing one partner’s income, the surviving parent may have to pay for childcare and more without the other parent pitching in.
- Single parents
- As the sole income earner for your family, you will want to think about how to replace your child’s only source of financial support.
- Stay-at-home parents
- From cooking meals to shuttling kids to school to helping with homework, stay-at-home parents perform many critical responsibilities that would be costly to outsource.
What are the different types of life insurance?
Life insurance falls into two categories: term life insurance and permanent life insurance.
Term life Insurance
- Term life insurance protects for a specific period (the term): up to 10, 20, 30, or 40 years. Term life insurance makes sense when you need protection for a specific amount of time–for instance, until your kids graduate from college or your mortgage.
- Term life insurance typically offers the most coverage for the lowest initial premium.
Permanent life insurance
- Permanent life insurance provides lifelong protection as long as you pay the premiums. It also accumulates cash value on a tax-deferred basis, which you can tap into to buy a home, supplement your retirement income, cover an emergency expense, and more.
- Because of these additional benefits, initial premiums are higher than what you would pay for a term life insurance policy with the same amount of coverage.
You Might Want a Mix
Depending on your circumstances and financial goals, sometimes a combination of term and permanent insurance is the answer.
What does the average life insurance cost?
The price of life insurance depends on four main factors: your age, your health, the type of policy, and how much coverage you buy. In general, you will pay less the younger and healthier you are. You also typically pay less for a term life policy than a permanent one.
Do not let your age or health status discourage you from considering life insurance. Policies are available for people of any age and those with high blood pressure, diabetes, and smoking habit. (Know that you will generally pay more for your policy if you’re in poor health and smoke.)
Still wondering about the answer to the question of how much life insurance costs? If so, here is a working idea:
A healthy 30-year-old can get a $250,000 20-year policy starting at $13 monthly.
That means if you purchase that policy and pay the $13 a month without fail, your loved ones will get $250,000 if you die during those 20 years.
How much life insurance do I need?
The amount of life insurance depends on whom you want to protect financially and for how long. For a general idea, consider the following:\
- Add up the immediate, ongoing, and future expenses your family or loved ones would incur if you were to pass away. That could mean everything from funeral costs to rent, mortgage, and college tuition.
- Add up the financial resources your loved ones already have. That could mean a spouse’s income and life insurance are already in place.
- Subtract your financial resources from the anticipated expenses.
The difference between the two numbers is the approximate life insurance to buy.
As an easy rule of thumb, experts recommend having life insurance that equals 10 to 15 times your gross income. But many people need even more than that.
How much life insurance do I need?
The amount of life insurance depends on whom you want to protect financially and for how long. For a general idea, consider the following:
- Add up the immediate, ongoing, and future expenses your family or loved ones would incur if you were to pass away. That could mean everything from funeral costs to rent, mortgage, and college tuition.
- Add up the financial resources your loved ones already have. That could mean a spouse’s income and life insurance are already in place.
- Subtract your financial resources from the anticipated expenses.
The difference between the two numbers is the approximate life insurance to buy.
As an easy rule of thumb, experts recommend having life insurance that equals 10 to 15 times your gross income. But many people need even more than that.
Long-Term Care Insurance
Are you aware that neither your health/medical insurance nor Medicare covers the cost of Long-Term Care services in case of a disability or an extended illness? Needed services requiring “Hands-On” assistance in your home, assisted Living Community, Memory Care, or Nursing Home? Long-Term Care insurance can reduce family financial burdens.
What is Long-Term Care?
Long-Term Care revolves around the many tasks and services necessary to assist a person with their daily health and personal needs for a short or long-term period. Typically, the benefits are for “activities of daily living” – bathing, dressing, grooming, toileting, eating, and moving around. And the loss of cognitive ability.
Long-Term Care Planning
Long Term Care is no different from planning for an auto accident, house fire, or premature death. Most people have Auto, House, and Life insurance coverage for those possibilities with the hope of never needing it, especially with Term Life insurance. But without those insurance policies, you’re not protected or your family from a sudden accident, a work injury, or a medical diagnosis. The goal is protecting your hard-earned savings and lessening family burdens. We plan for the worst and hope for the best.
Who Needs Care?
- Age-the longer you age, the greater possibility for need.
- Gender- Women outlive men by an average of 5 years hence, the potential of living alone.
- Disability- a disability is not limited to age; it can be for an accident or a medical illness.
- Health Status- Chronic conditions and poor health can contribute to the need for “Hands-On” assistance with everyday tasks to function throughout the day.
- Living Arrangements-Single and without a partner
Types of Long-Term Care Plan Options and Funding Sources”
- Traditional Insurance: Greatest price value but “Use it or Lose it.”
- Hybrid: Life Insurance with Long-Term Care or Critical Illness rider
- Short-Term Care Insurance: Coverage for up to 360 days
- Asset-Based Care Funding: Life Insurance with Long-Term Care benefits
- Disability Insurance: A portion of lost work Income due to an accident, illness, or work-related incident
- Life Settlement: The sale of an existing insurance policy to a third party for a one-time cash payment.
- Veterans: Benefits available based on military service
- Medicaid: Available after required Government “Spend-down.”
- Self-Funding: Self-Pay- Personal funds, including pensions, savings, and stock income.
When should I buy long-term care insurance?
Today’s policies combine Life Insurance with long-term Care or critical illness plans – Hybrids. The rule of thumb when pursuing either Life and Long-Term care insurance options is that age and health impact the rates and insurability—best to plan in your 40s or 50s while age and health are in your favor.
Where do I start?
Start today for your complimentary consultation and quote. www.yourlifesecurity.com/contact/
Sources:
https://lifehappens.org/long-term-care-insurance-101/
https://content.naic.org/consumer/life-insurance.htm
https://www.naic.org/documents/prod_serv_consumer_lig_lp.pdf