Disability insurance can help cover lost income

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What would happen if your income stopped?

Without a paycheck, how long could you pay your rent or mortgage and utilities, buy groceries, make student loan payments, etc.?

How many of the "extras" that you enjoy in life would you need to give up?

In all likelihood, your financial future would be thrown significantly off course.

A strong financial plan must not ignore this possibility. Having an attitude of "that won't happen to me" puts a lifetime of hard work and planning at risk.

Most disabilities (about 90 percent) are caused by various illnesses, including cancer, mental disorders and heart disease. Some of the most devastating experiences in life are often out of our control.

For instance, according to U.S. Savings and Trust, 48 percent of all foreclosures on conventional mortgages are due to owner disability, while only 2 percent are due to owner death.

Disability income insurance can help replace a portion of your income if you become too sick or hurt to work. It provides a buffer against the unexpected.

Disability insurance provides income that can be used to help keep your household running as you adjust to your new circumstances.

Disability insurance policies come with many different riders, or features, to help customize your policy. Ask your financial planner to help you understand the many features offered to ensure your policy is specific to your needs.

Here are some common terms you should make sure you understand when customizing your policy:

  • Total disability
  • Own occupation/any occupation
  • Non-cancellable/guaranteed renewable
  • Residual income
  • COLA
  • Elimination period
  • Benefit period

Once you've decided to help protect a portion of your income, the next step is to make sure your policy fits your needs.

Whether or not to obtain disability insurance is a personal decision, but once you have made it, be sure to seek the advice of your financial planner or reputable insurance agent.

You want to be sure that you have a strong understanding of your policy and can rest assured that you have adequately protected the people and assets that are most important to you.

Luke Gawronski, a financial planner with Barnum Financial Group, is a registered representative of and offers securities, investment advisory and financial planning services through MML Investors Services, LLC. Member SIPC. lgawronski@barnumfg.com

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