Disability Insurance: The Overlooked Necessity

By Central Coast Wealth Management
11:30 AM, Oct 21, 2020
2:21 PM, Oct 21, 2020

Insurance – none of us want to pay for it, yet we are thankful to have it when an unfortunate event occurs. After all, paying for something that we may never use is not a favorable situation, yet we accept insurance as the exception.

Why Do We Need Insurance?

No matter what type of insurance is being considered, it is a means of protecting our assets and our wealth. It is a security we all value and a safety net we don’t want to risk being without.

In determining your need for insurance, consider the ways in which the coverage will benefit you as well as the extent of the loss that you could possibly endure if you don’t have coverage. The value of what you are ultimately protecting will play a role in determining the appropriate insurance and coverage amounts for your situation.

Disability: The Insurance You Shouldn’t Go Without

Most people agree that life insurance, auto insurance and health insurance are necessary. Yet, there is an often-overlooked type of insurance that shouldn’t be undervalued: disability insurance.

Disability insurance comes into play if you sustain an injury or develop an illness or health condition that renders you unable to work – and unable to earn a paycheck.

Because disability has a work connotation attached to it, many people make the mistake of assuming complete coverage is being provided by their employer in the form of worker’s compensation. That coverage only exists, however, if you are injured while on the job. While employers may also offer disability insurance, less than 40% of workers take advantage of employer-provided disability insurance. Even if you don’t work at a high-injury-risk job, disability insurance still plays a major role in replacing your income if you are disabled.

What would happen if you are unable to work due to an off-the-job accident or develop a life-threatening illness? Any type of accident or illness that is serious enough to put you out of work is going to impact your wage-earning ability. In fact, a common cause of bankruptcy is disability.

The extra security that disability insurance gives you as a means of protecting your family and your assets deems it one of the most important types of insurance to have.

What Does Disability Insurance Cover?

Depending on your policy choices, and whether you have short-term or long-term disability insurance, the coverage options will vary. The purpose of disability insurance is to replace lost wages, so tailoring your policy to fit your specific needs is part of what your CERTIFIED FINANCIAL PLANNER™ practitioner will assess for you.

Short-Term Disability Insurance

· Short-term disability is just as it sounds, covering a percentage of your wages for a short period of time while you recover, with payments ending after you go back to work. Payments can extend up to one year, but that is usually the maximum.

Long-Term Disability Insurance

· Long-term disability, which is not often offered by employers, can extend wage-coverage benefits for years. Long-term disability doesn’t extend past age 65, and also ends once you are able to return to work.

Because disability doesn’t have to be in the form of an injury and can also be due to ailments like cancer, brain injuries or heart disease, more of the working population is vulnerable. Knowing there is a safety net available that will cover wages, commissions, and bonuses makes paying for the unexpected that much easier.

Central Coast Wealth Management, located at 1104 Palm Street in San Luis Obispo, California, will consider your disability insurance options as part of your long-term financial strategy. They will take into account any tax implications that may affect you as a result of drawing benefits, as well as determine the amount of coverage you will need to protect your home, your retirement assets, your living expenses and your children’s education expenses.

Central Coast Wealth Management can be contacted through an online form or by calling 805-439-0370.

The Financial Professionals of Central Coast Wealth Management are Registered Representatives and Investment Adviser Representatives with/and offer securities and advisory services through Commonwealth Financial Network® Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance Agency.

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