Disability Income Insurance

Disability income insurance provides periodic payments when the insured is unable to work because of injury or illness.  It’s important to protect the assets that create wealth – your ability to work and earn income.

Disability benefits may also be for partial or residual disability as well as total disability.  While it is not often recognized, the financial impact of total disability may be greater than the financial impact of death.  A person may live for many years totally disabled and therefore unable to generate income to pay for higher medical and living expenses.

It is best to insure income not occupation. You need to know your net worth, savings, outstanding debts, and sources of income. You understand what resources are available in case of death or disability and what needs exist beyond ongoing expenses.

Factors to consider when choosing a disability income policy include the length of waiting period before benefits begin, how long you want the benefits to last (benefit period) , and the type of disability for which you want to be insured.

Most disability policies pay 50-80% of earned income and benefits become payable after a waiting period of 30, 60, or 90 days. You should focus on ability to manage short-term disabilities and choose a cost-effective plan.  Policies can be for 2, 3 and 5 years or until age 65.

Definitions:

1. Own occupation- The most liberal definition-  “total and continuous inability to perform any and every duty of his/her regular occupation.”
2. Any Occupation-  (Social Security Definition)- “unable to engage in any substantial activity by reason of any medically determinable physical impairment which can be expected to result in death or disability will last greater than 12 months.”
3. Social Security Benefits-  Based on your salary and the number of years you have been covered by Social Security.  You’re eligible for benefits after you have been disabled for six months and if the disability is expected to last at least 12 months.  After 24 months of benefits, recipients qualify for Medicare.  Social Security benefits are subject to federal income taxes if your adjusted gross income plus any non-taxable interest income and half of your SS benefits between $25,000 to 34,000 (single) and $32,000 to $44,000 (joint).

Guarantees offered by insurance company and their claims paying ability not Tidewater Financial Group, Bruce F. Williams or Investors Security Company, Inc.