Vail Daily Personal Finance: Do you have disability insurance? |

Vail Daily Personal Finance: Do you have disability insurance?

Trish French
Special to the Vail Daily
Vail, CO Colorado

VAIL, COlorado –While most people don’t think twice about insuring their cars and homes, they often leave one of their most important assets unprotected – their paychecks.

Working Americans rely heavily on their paychecks to support their families and fund their everyday living expenses, but few consider how their lives would be affected if they were unable to work due to an illness or injury and couldn’t bring home a paycheck.

Your paycheck is one of your most valuable assets. Just as you insure other valuables such as your home or car, it is crucial to insure your income. Think of disability insurance as insurance for your paycheck. It provides an income if you’re unable to work due to an illness or injury.

According to a LIFE Foundation survey, nearly 50 percent of working Americans say they would not be able to make it a month without financial difficulties if a disability kept them out of work. More than one in four say they would face financial problems immediately.

While no one likes to think about becoming disabled, the chances of suffering a long-term disability are much higher than most people think. According to the consulting firm Milliman, Inc., U.S. workers have a three in 10 chance of becoming disabled for 90 days or more between age 35 and 65. That means disability income insurance is something every working person needs to be thinking.

Disability income insurance is the most overlooked and misunderstood of the major forms of insurance. These tips can help people assess their coverage needs:

Step one: Determine if you need it. The general rule of thumb is: If you have a job, you need disability income insurance. It provides replacement income if you’re unable to work due to injury or illness, helping you meet your financial obligations until you are able to return to work.

Step two: Estimate how much you need. Determine what your monthly living expenses are and compare them with the money available to you absent your paycheck, such as current insurance coverage through work or purchased on your own, savings, and income from other family members. Often, these resources may not be enough to support your standard of living if you were no longer able to earn a paycheck. Use Thrivent Financial’s disability income insurance calculator to help you figure out how much coverage you may need:

Step three: Explore your options. There are several ways you can obtain disability income insurance. While a common source of coverage is through employers, you can also purchase an individual policy through a qualified insurance professional. If you belong to a professional organization, you may be able to purchase disability income insurance through a group plan. Meeting with an insurance professional in your community or your benefits manager at work can help you sort through your various options and find a plan that fits your needs and budget.

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Certified financial planner Patricia French is with Thrivent Financial for Lutherans, a not-for-profit, Fortune 500 financial services company. She can be reached at (970) 926-0251.

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