When You Can't Work

If you work and especially if you are younger, your ability to earn a living is likely your greatest asset. Knowing this, consider how disability income (DI) insurance can help protect that asset.

Disability Happens

When we are younger, it’s natural to think we are unbreakable, if not immortal. Statistics, however, point to a different outcome.
The Council for Disability Awareness has a website at www.whatsmypdq.org that calculates your likelihood of becoming too injured or ill to work before normal retirement age. “PDQ” stands for personal disability quotient.

Using this calculator, a 30-year-old male non-tobacco user who is 6 feet tall, weighs 175 pounds, works mostly in an office, has no serious health conditions and a very healthy lifestyle can still expect an 11% chance of having a disability lasting three months or longer. If disabled for three months there is a 35% chance of the disability lasting over five years.

Loss of Income

If this 30-year-old were to become disabled for a lifetime and he previously earned $1,000 per week and expected an average 3% increase per year, the rest of his lifetime earnings is more than $3 million.

Social Security benefits won’t make up the difference. Worker’s compensation insurance, if you suffer a work-related disability, pays for related expenses. Disability income insurance can help you recoup some lost income.

DI Primer

To figure how much individual DI insurance you might consider, first calculate your expenses. Add potential sick pay, company disability benefits and other related payments. Individual DI can make up the shortfall.

Once you choose your coverage, consider your benefit period. That’s how long you want to have benefits last, from a couple of years all the way until normal retirement age. Finally, choose your elimination period. That’s how long after your disability-related work absence begins until you receive the first payment of benefits.
The more generous your benefits, the more expensive your premium payments will be. Choose the right benefit for you. Talk to a financial professional to learn how to protect your greatest asset: your income.