Life Is Uncertain – Consider Disability Insurance

March 13, 2019

You never know when an injury or illness might affect your income-earning ability. To financially protect your family, and give yourself peace of mind, periodically assess your disability insurance coverage and determine whether you need to purchase an individual policy.

Employer Coverage May Be Inadequate

Most people receive short-term disability coverage — for disabilities lasting anywhere from two weeks to two years — through their employers. Less common, but no less important, is long-term coverage. Unfortunately, even when an employer provides long-term coverage, the amount of that coverage is often inadequate.

If your employer doesn’t offer disability insurance, or provides less than adequate coverage, consider buying an individual policy. This type of policy may offer several important benefits not provided by group coverage.

First, it’s portable, meaning your policy will stay with you even if you leave your job. Second, disability income received from an individual policy is income-tax free, as long as you pay the premiums yourself. Finally, an individual policy allows you to decide how much coverage you need.

Cost Considerations

Generally, the older you are or the longer your desired coverage period, the more you can expect to pay in premiums. Also influencing your policy cost is whether your insurer is permitted to raise your premiums (“noncancelable” policies prohibit this as long as you keep paying your premiums) and the length of your elimination period, or how long you must wait before you begin to receive benefits after a disability.

Coverage Amount? No Single Right Answer

Conventional wisdom says you should make sure you’re covered for 50 – 60 percent of your net income. Because there’s no single right answer for everyone, sit down and calculate how much
money you’d need each month to meet all of your expenses. Your financial advisor can help.

You may be able to save money by not duplicating benefits you already have. For example, if your employer provides short-term disability coverage for one year, you might want to set your policy’s elimination period for at least that long.

While individual disability policies tend to be expensive, trying to save money by skimping on coverage is probably not your best strategy. Less expensive policies often lack important protections and may severely restrict your benefits. Your worst-case scenario would be to suffer a disability and then find yourself without the protection you thought you had purchased.

Don’t wait

It’s important to assess your disability coverage now, while you’re healthy. If you wait and then suffer a disability, unfortunately it will be too late to obtain the coverage you need.

The information contained herein is not intended to be personal legal, investment or tax advice or a solicitation to buy or sell any security or engage in a particular investment strategy. Nothing herein should be relied upon as such. The views expressed are for commentary purposes only and do not take into account any individual personal, financial, or tax considerations. There is no guarantee that any claims made will come to pass.

Mariner Wealth Advisors (“MWA”), is an SEC registered investment adviser with its principal place of business in the State of Kansas. Registration of an investment adviser does not imply a certain level of skill or training. MWA is in compliance with the current notice filing requirements imposed upon registered investment advisers by those states in which MWA maintains clients. MWA may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. Any subsequent, direct communication by MWA with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For additional information about MWA, including fees and services, please contact MWA or refer to the Investment Adviser Public Disclosure website. Please read the disclosure statement carefully before you invest or send money.

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