Homeowners
Insurance
Most people have insurance
coverage on their homes, autos, etc., but many have not realized the
value of their future earnings may far exceed
the value of their tangible assets. If your future earnings cease because
of an accident or illness, the loss of income could present serious
financial problems. Studies indicate that for people under age 65,
the odds of a disability lasting for 90 days or more are much higher
than the odds of dying. (Source: Social Security Administration 6/99).
Disability income insurance policies can help replace
a portion of the loss of income due to disability during one’s
working years. The following is a list of features disability income
policies can include:
Non-cancelable, guaranteed renewable provisions.
Protection
against inflation for future benefits paid, referred to as Cost of
Living Adjustment (COLA).
Various elimination periods before benefits
begin, typically 30, 60, or 90 days, 6 months, or one year. The longer
the elimination period,
the lower the premium. A person’s liquid reserves, income, and
existing disability income insurance must be considered when selecting
an appropriate elimination period.
Some policies provide “Own
Occupation” coverage and will
pay benefits if those insured are unable to work in their specialized
field.
Policies offer varying benefit periods. Some policies,
for example, offer a lifetime benefit if the disability was caused
by an accident,
and to
age 65 for disability caused by illness. Disability can last for
a long time. The longer the period covered by the policy, the higher
the premium.
Disability policies may be purchased by an individual
or by a company. Others may be acquired on a group or association
basis.
Other types
of Disability Income policies include:
Key Employee Disability
Insurance – When the
employer owns the policy, the insurance benefits can provide funds
to help cover expenses
related to the loss of a disabled employee, such as hiring and
training a replacement.
Disability Buy-Out – Funds can be provided
to help effect a buy-out of a disabled business owner or professional
under the
terms of a Buy-Sell
agreement.
Business Overhead Expense – If a business owner
or professional becomes disabled, these policies can provide funds
to help cover ongoing
expenses such as rent, employee salaries, etc., to keep the business
open during the period of disability.
Of Special Note: Some policies pay benefits when earnings
drop by a certain percentage due to a disability. Others require a physician’s
certification to pay or continue benefits. Also, some policies provide
for partial
or residual disability benefits where the insured can perform some,
but not all of their duties. Policy language and provisions should
be carefully
reviewed. |
