Believe it or not, your most valuable asset is you. Put another way, your most valuable asset is your ability to earn income over your lifetime. By working for 30, 40, or maybe 50 years, you can generate a considerable amount of income for yourself and your family.
You, Inc.
So, it might be helpful to start to think of yourself as You, Inc.
As a successful operation, You, Inc., generates income from the products or services it provides. That income allows you to purchase housing, transportation, food, apparel, and all the other things that you enjoy. But what if an injury or illness prevented You, Inc., from producing for a period of time? You, Inc., should consider how it can continue to generate income during an unplanned downturn.
“Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever.” 1 Timothy 5:8
It Will Never Happen to Me
One study found that just over 1 in 4 of today’s 20-year-olds will become disabled before they retire. Another study found that more than 40% of individuals aged 40 will have a long-term disability by the time they turn 65. And accidents are not usually the culprit. Back injuries, cancer, and other illnesses cause the majority of long-term absences.1,2
The duration of the average long-term disability claim is 34.6 months.1
Keep in mind that disability insurance is offered only by certain insurance companies. Not all policy types and product features are available in all states. Any disability obligations are dependent on the ability of the issuing insurance company to make claim payments.
Disability Insurance Explained
For some, disability insurance may be available through your employer, which may offer coverage as part of your benefits package. Employer plans can pay up to 60% of your income, which may be enough to cover your bills for a short period of time.3
The potential limits on employer-sponsored disability insurance are why some people look to purchase private individual plans, which can cover up to 90% of your income.3
Disability Tax Facts
When you purchase disability insurance on your own, the benefits generally are not taxable since you paid for the policy with after-tax dollars. With employer plans, the income you receive may be taxable if the employer paid for the benefit.3
Disability Coverage
Disability insurance also has what’s called a “waiting period,” which is the amount of time before your coverage kicks in. Waiting periods can be as short as 30 days or as long as 365 days, depending on the type of coverage.4
With disability insurance, there are short-term and long-term policies. A short-term policy may see waiting periods as short as 30 days, while long-term policies generally have longer waiting periods before coverage begins.4
When we work with people who have questions about disability, we first want to see if their employer offers coverage and what the features of the plan are. Once we have a better understanding, we can present illustrations that show how a private plan would work in your situation.
We believe that You, Inc., is a valuable asset! Let’s talk about how a disability policy might fit in with your overall financial strategy.
- Council for Disability Awareness, 2023
- Investopedia.com, March 14, 2022
- USBank.com, February 9, 2023
- Mutual of Omaha, 202
