When engaging in the financial planning process, the impact of death and the need for Life Insurance to protect the family’s assets and lifestyle is always analyzed and determined. However, the same cannot be said for a disability. We have an inherent visceral need to protect our family in case we die, but somehow, the thought of a long-term disability, and the impact thereof, doesn’t seem to fill us with the same level of concern.
The reality cannot be more different from our psychology. The risk of a long-term disability is significantly higher than a premature death, with a staggering impact.
While actual statistics on a disability lasting more than 90 days can be hazy at best (and we don’t quote fuzzy math on our website), and differ widely between men, women, white-collar, and blue-collar, the reality is very clear. By all measures, one is more likely to suffer a long-term disability than a premature death prior to age 65. Yet many of us seem to think that either it “won’t happen to us,” or if it does, we wouldn’t really be prohibited from continuing to earn a living.
As for the financial impact of a disability, it is a “fate worse than death.” In the event of death, expenses to manage the household will usually decrease, given the elimination of fixed and variable costs of the deceased. However, with a disability, expenses almost always increase the need to equip the home for managing the disabled’s needs, and other non-insured medical and transportation expenses.
At Myerson Wealth, we work with our clients to manage disability benefits for the following needs:
- Executive High-Limit Disability Benefits – These benefits are for those of our clients who earn significant income (i.e., athletes, doctors in a medical specialty, partners in law firms, actors and entertainment executives, or business owners) and need to protect their income in excess of traditional maximum disability income limits.
- Disability Income – This is the traditional disability policy that, once in place, will pay a benefit of up to 60% of income to a policy limit of usually $20,000 monthly. These policies usually expire at age 65, or continue to age 70 with reduced benefits.
- Disability Key Person or Disability Buy-Out Coverage – These policies are designed to protect business owners in the event of a long-term disability. They are usually paid out as a lump-sum after an extended waiting period and will provide for loss of income to the business in the event of a disability of a key-person, or provide the capital (or down-payment) to buy out the ownership of a disabled co-partner or shareholder.