Contributed by William Bevins, CTFA at Cypress Capital (Franklin, TN)
Wealth protection and preservation is a vital part of any financial plan. I find the most overlooked and ignored area of wealth protection for working individuals, especially self-employed, is disability insurance.
For self-employed individuals, the inability to work or run your business for an extended period of time could be devastating to the organization. The self-employed tend to do a great job of providing their own health insurance and retirement funding, but fail to calculate the importance of insuring their incomes.
There are many studies that support this idea. The Insurance Information Institute (The III) states that 40% of people age 40+ will experience a long-term disability during their working career. Another states 30% of all working adults will experience a disability for over 90 days before reaching age 65.
Disability Claims Are Not Uncommon. Have a Plan.
One reason an individual might put off acquiring this type of insurance is because they believe being involved in an accident will never happen to them. The fact is, most disability claims are associated with an illness such as cancer, heart attack, diabetes or obesity. Even arthritis and back pain are among the most common types of disability claims.
Disability Insurance Can Be Complex.
Let’s face it, most financial plans are written around earned incomes to fund things like retirement goals, education or legacy planning.
One reason why I believe the realities of disability are not discussed more openly is that many insurance professionals aren’t well-versed in the area of disability insurance. The majority of licensed professionals write less than five disability policies in their career.
Plus, contracts and coverages are very complex and ever-changing:
- Should you get short- or long-term coverage?
- What should you select at the time of application: own-occupation, any occupation, or modified own-occupation?
- What about length of benefit? Length of elimination period? The dollar amount of coverage available? Renewability?
As you can see, there are many variables involved in disability insurance.
Should You Rely on Group Insurance?
Lastly, some view group insurance as a viable solution when addressing this matter. Many group plans offer a coverage capped at 50% of income, while some plans have limited coverage language. My inclination has always been toward purchasing disability insurance privately. This way, the insured selects the specific coverage, the specific contract type, and the length of coverage that is tailored to their needs. More importantly, this contract cannot be taken away with a change of employer or elimination of company benefits.
An Experienced Financial Advisor Can Help.
Outlining these specific points illustrates why working with an experienced financial advisor is important. I offer clients unbiased advice to help eliminate the risks involved with losing their incomes due to illness or injury. Disability insurance is a specialized field; you deserve specialized attention. Contact me with any questions you may have.
If you’re not currently working with an advisor, or if you’ve lost contact with your current one, let’s start a conversation. Contact me at [email protected] or by calling (615) 469-7348. For more information and to view some sample portfolio models, visit https://www.billbevins.com. Read my other articles in Williamson Source here.
William Bevins is a Registered Investment Advisor with the SEC. Mr. Bevins began his Advising career in 1995 and has spent 18 years as a Professional Equities Trader. Today his firm, Cypress Capital located in downtown Franklin, TN, manages $260 million from individuals, small and medium size businesses, pensions, and charities. For more information please visit http://www.billbevins.com.
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