Your most valuable asset isn’t your house, car or retirement account. It’s the ability to make a living. Family disability income insurance can help replace a major portion of your income if you are unable to work. Some think of it as “paycheck protection.” Others view it as “mortgage protection.” Whatever your mindset, family disability income insurance can help provide a sense of security, knowing that if the unexpected should happen, you’ll still receive a monthly income, especially if you don’t have other sources of income available.
One reason people may shrug off getting family disability insurance is they think about worst-case scenarios, such as spinal cord injuries leading to quadriplegia or horrible accidents that result in amputation. But you may be surprised to know that back injuries, cancer, heart attacks, diabetes and other illnesses lead to most disability claims.
There are two main types of family disability insurance — short-term and long-term coverage. Both replace a portion of your monthly base salary up to a cap, such as $10,000, during disability. Some long-term policies pay for additional services, such as training to return to the workforce.
If you earn a higher salary, or rely on bonuses or commissions, you may need additional income protection to provide for you and your loved ones while on leave from work due to a covered illness or injury. Long Term Disability (LTD) is an excellent foundation for income protection; but benefit maximums, uncovered compensation, and taxable benefits may leave higher income earners with a gap in coverage.
Family disability insurance plans help protect your income by replacing a higher percentage of your income, covering commissions and bonuses, and are individually owned, so you can keep the policy if you change jobs. Plus, benefits are not offset by Workers’ Compensation and Social Security Disability Insurance payments. Shelton Insurance also offers disability insurance for self-employed individuals.
To estimate the benefit amount you would need if you became disabled, ask yourself how much monthly income would cover your living expenses. Household expenses may include mortgage and car payments, groceries and child care. Consider all these factors to help you come up with an appropriate amount.
The annual price for a long-term family disability insurance policy generally ranges from 1% to 3% of your annual income. A variety of factors affect the cost.
Family disability policies vary in how they define “disabled.” Some policies pay out only if you can’t work any job for which you’re qualified. Others pay out if you can’t perform a job in your occupation. Some policies cover partial disability, which means they pay a portion of the benefit if you can work part time. Others pay only if you can’t work at all.
At Shelton Insurance, we are family disability insurance brokers who will help you understand and consider all the options to determine how much coverage you should purchase. Generally, you can’t replace more than 75% of your income from all the coverage combined.
Ready to get family disability insurance? We’re here to listen to your questions and help you get answers. Sometimes talking over the phone is easier. Call us at (831) 637-8941.