You love what you do, and it’s taken hard work to achieve what you have. Now you’re reaping the rewards—including your income. So what would happen if, due to an illness or injury, you were unable to work for an extended period of time, or perhaps the rest of your career? Where would the money come from to maintain your lifestyle, fund your retirement or grow your investment portfolio?
That’s where disability insurance comes in. It pays you a portion of your salary if an illness or injury prevents you from working. But as a high-income earner, coverage offered through work is typically not enough. It’s important to consider the following:
Understand how it works. Disability insurance typically covers between 50% and 70% of your income. However, coverage at work generally wouldn’t include things like bonuses and would cap the amount of income covered. Do you know what that cap is, and is it enough to maintain your lifestyle?
Know what you have at work. Do you have short- term or long-term disability insurance coverage, or both? How long does it take before the benefits start? Is there a limit on the benefit period, such as three
or five years? Make an appointment with your HR representative to find out.
Because the idea of income replacement is so tied with your other wealth strategies, this is a topic to explore with your trusted insurance or financial professional.
It’s smart to consider an individual disability insurance policy that stays with you through your career. As you explore, keep in mind:
Own occupation vs. any occupation. Having a policy that covers your own occupation is a key consideration. It means if you can’t perform your covered occupation, your benefits would kick in. That’s in contrast to a policy that covers you only if you couldn’t work in any occupation. The difference is huge.
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