More Things You Might Not Know, But Should

When buying insurance, there is one thing I have never understood:  People who insure their lives, but not insure their income.  The first is life insurance, the second (insuring their income) is disability insurance.  Both could be bought to keep their family or business secure, but life insurance is the only one you hear about.

 It’s hard to think about what life would look like if we were ill and unable to work, unable to produce an income.  But it happens.  Diabetes, cancer, heart disease, freak accident outside of work, the loss of income can be so devastating that It forces some people to foreclose on their home or even declare bankruptcy. 

 Disability is an insurance product designed to replace a percentage of your gross income should an illness or non-work related injury prevent you from earning an income in your occupation.  This coverage pays the bills while you get better, then stops when you return to work.  A typical group plan (through your employer) will replace up to 60% of your salary.  Supplemental plans and individual policies could cover up to 70% or 80% (no plan will cover all of your salary for fear you will have little or no incentive to get back to work!).

 Benefits typically start after a certain period of time and last for a set number of years (say 5 years), or until you reach retirement age (benefits typically stop around retirement age since once you retire, you would no longer be dependent on the income you generated by working).  If you pay the premium out-of-pocket…meaning your employer doesn’t cover the tab…..benefits are tax free.

 There are a bunch of different carriers, good and bad.  There are a bunch of different options to decide upon when purchasing a policy.  Go to an agent you like and trust and work with them to find the best fit for you.  Then tell your family what you bought and why.  A late valentine present!

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