Is it your home? Your car? Your jewelry? Perhaps your adult toys?
No....it's your income! Your income is the most important asset you have.
Think about this? If you lost your ability to earn an income, how would you pay for your home, car, jewelry and toys?
So how can you protect your ability to earn an income and your monthly paycheck? If you guessed Disability Insurance, you are correct.
Disability insurance pays you up to 65% of your income if you become hurt or sick and can't work.
If you own a personal disability insurance policy, your benefits will not be taxed. If your employer pays for your group disability insurance, your benefits may be taxed. Speak to your HR manager to confirm this. If they are taxed, you can still purchase an individual policy to fill the gap you are losing to taxes.
So how does a disability policy work?
Here are 4 important factors that determine the cost of your policy.
How much of a benefit do you want? You can get a benefit up to 65% of your income or less. Depending on your need and budget, you may just want enough protection to cover the mortgage or rent.
How long do you you want to wait before the benefit begins? This is called a waiting period. You will see 30 days, 60 days, 90 days, 180 days and sometimes 360 days. The typical waiting period people get is 90 days. It all depends on your emergency reserves. If you have enough money to get you by for 6 months, then you could choose 180 days.
How long do you want the benefit to last? Depending on your occupation, you can have it last for 2 years, 5 years, to age 65 or 67
What is your occupation? Your occupation is classified by codes such as 2A, 3A, 4A, 5A, etc. The lower the number the more favorable the occupation, thus a lower premium. The higher the number usually means your occupation is at higher risk for injury thus the higher premium. There are some occupations which an insurance company will not insure due to the high risk of injury.
All those factors, along with additional bells and whistles, which may be added to the policy, will determine the premium.
Please watch the following disability insurance video.