Protecting Your Most Important Asset

What’s your most important asset? Your home? Other property? Savings? For most Americans, one particular asset – your income – is more important than any of these. Everything most people own is dependent on their ability to earn an income. It’s that steady paycheck that allows you to hold on to what you have.

If you become unable to work because of sickness or injury, how would you pay your monthly bills? Generations of Americans continue to depend on disability income insurance, which was introduced by Mutual of Omaha and other companies in the early 1900s. Disability income insurance provides protection for your income. It’s an affordable solution that pays a monthly benefit while you are disabled due to a covered sickness or injury and can’t work.

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Nobody wants to think about becoming disabled, but ignoring the risks could result in a catastrophe. Can you afford to miss more than two months of work without having to borrow money? The problem is borrowing often isn’t feasible because it can be tough to get approved for a loan without an income. Social Security will pay disability benefits, but only after a lengthy waiting period. You can tap your savings, but that will exhaust most workers’ savings in about two months. Selling your assets is the last resort – but you may not get fair value for your assets and then you’ll have nothing.

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Disability Income Insurance Provides a Bridge

Disability income insurance provides a bridge over times of trouble. Disability income insurance can be designed to provide a significant portion of your regular monthly income (generally 60 percent) and benefits can be timed to begin according to need. Disability income policies also could continue to pay benefits during rehabilitation, job re-training, and part-time employment. A survivor benefit would pay a lump-sum benefit to your beneficiary if you die during a period of disability. Optional features (riders) could be added to most disability income policies at extra cost. These may include a cost-of-living adjustment to compensate for inflation and a return of premium rider. This latter feature may allow the consumer to specify that a portion of the premiums (sometimes up to 80 percent) will be paid back – less any claims paid – after the insurance has been in force for 10 years. Owners of small businesses who select disability income insurance could have business overhead expense coverage that will help pay business costs including rent, utilities and interest on business loans.

Disability income insurance also provides some benefits that are intangible, but still very important. Your most important reason for purchasing disability income insurance could be the “peace of mind” that comes with knowing that bills will be paid in the event of a disabling illness or injury.

And don’t underestimate the boost in confidence and sense of self-worth that comes from providing for your family even though you’re experiencing a disability.


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Ronald Williford is the CEO/Founder of Philadelphia Financial Consultants, LLC., an independent financial planning brokerage specializing in personal financial planning, retirement planning, small business consulting, and tax planning. He is a speaker on various financial topics and hosts the program “Let’s Talk Money.” He has over 36 years of experience in the financial services industry in various positions. His motto is, “Financial planning begins with education."

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