Disability Income Insurance Awareness Month Promote Awareness This May

 Your ability to earn an income may be one of your most valuable assets. Think about your home, your car, your health.  Would you go without homeowner’s insurance, car insurance or health insurance? Shouldn’t you consider protecting another important asset, your paycheck?
You and your ability to earn income may be a larger part of what your entire financial future is based on.  From building a home, affording college for your children, or savings for retirement – they may all depend on your ability to earn a living.
Understanding the risk
Just about everyone who has a job needs some sort of disability income insurance – including those who work in the home.  According to a Life Happens survey, you have a three in 10 chance of suffering an illness or injury during your work career which would keep you out of work for three months or more.  Whether you’re an income earner or a stay-at-home parent, the value you provide will need to be replaced.
The financial consequences can be far reaching.  For example, a 25-year old worker who makes $50,000 a year sufferers a permanent disability could lose $3.8 million in earnings according to the Life Foundation.
Workers compensation is a fallback option for many workers; however these programs only cover illness or injury that strikes at work, and a 2013 study from the Council on Disability Awareness shows that only five percent of disabilities happen in the workplace.
What coverage is right for you?
When thinking about your disability income insurance needs, there’s no substitute for thorough needs analysis conducted by a financial professional.  Be sure to consider both your short term and long-term expenses as well as alternative income streams such as investments or group disability coverage.
Generally, most individuals can get coverage for up to 70 percent of their earned income.  Some employers offer group disability coverage, so check what type of coverage you may currently have as it will affect how much additional coverage you may qualify for.
Below are some key terms to know when considering the type of coverage you would need.
Terms to know
Elimination Period – the amount of time you are required to wait after a disability occurs before you can receive benefits, which traditionally ranges between 30 and 90 days.
Benefit Period – a policy options concerning the amount of time you receive benefits, which can range from several months to several years or to age 65 or 70, depending on your specific needs and the plan options available.
Taxable or Tax-free income – if your employer pays your disability income insurance premiums, any benefit you receive will be taxable because they’re considered income.  If you pay your premium with after tax dollars, then your benefits will be tax free (according to current IRS regulation)
Retirement – when considering coverage needs, keep in mind that you may want to continue funding for your retirement needs, even if you’re not working.
Definition of disability – some plans pay benefits if you can no longer perform the duties of your current occupation, while others pay only if you’re unable to perform the duties of any occupation.  Still others will pay benefits on loss of earned income.  Each option offers a different level of cost and benefit.
While no one wants to think about losing their ability to work, it’s important to consider a plan for your financial future, so you know what you could do if you were unable to earn an income.
Melanie Meyer, CFP, CLU, and Jeff Meyer, CLU, ChFC, are owners of the Pathway Financial Group of Thrivent Financial.  They have offices at 25350 Magic Mountain Pkwy, Ste 300, in Valencia, and can be reached at 661-799-0230.
Insurance products issued or offered by Thrivent Financial, the marketing name for Thrivent Financial for Lutherans, Appleton, WI. Not all products are available in all states. Securities and investment advisory services are offered through Thrivent Investment Management Inc., 625 Fourth Ave. S., Minneapolis, MN 55415, a FINRA and SIPC member and a wholly owned subsidiary of Thrivent. Thrivent Financial representatives are registered representatives of Thrivent Investment Management Inc. They are also licensed insurance agents/producers of Thrivent. For additional important information, visit Thrivent.com/disclosures. If requested, a Thrivent Financial representative may contact you and financial solutions, including insurance, may be solicited.