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How Disability Income Insurance Can Help Protect You

Posted October 31, 2012 in Advice Column, Urbandale

We depend on our paychecks to cover our expenses: groceries, housing, transportation — and those are just the basics. When a person is unable to work due to a disabling injury or illness, the financial impact of lost paychecks can be devastating.

An income interruption due to a disability isn’t something you can afford to ignore. According to the Social Security Administration, more than one in four 20-year-olds will become disabled at some point before they retire. And 50 percent of working Americans would suffer financial issues in less than a month if they lost their paycheck. Twenty-five percent would have problems immediately — within a week — according to the Life and Health Insurance Foundation for Education (LIFE Foundation).

Here are some steps you can take right now:
    • Help protect your paycheck. When the unexpected happens, disability insurance can help. Disability insurance essentially replaces a portion of your income — generally about 40 to 60 percent — if you can’t work due to accident or sickness, says Matthew Tassey, CLU, ChFC, LUTCF and past chairman of the LIFE Foundation. “Disability insurance should be a priority,” he says. “We always have expenses.”
   • Find the right fit. There’s no one-plan-fits-all approach to disability insurance. Some employers offer disability coverage, whether long-term or short-term, so check with your company’s benefits manager to see if you have coverage, and if so, what that coverage provides. If you don’t have it, you can purchase an individual plan.

Some terms to know when shopping for disability insurance:
    • Elimination period. Refers to the length of time you need to be disabled before you receive payment.
• Benefit period. Refers to the length of time benefits will last.

“The quicker the money comes your way and the longer it pays, the more expensive it is,” Tassey says. And he points out that, on average, a 30-year-old non-smoking healthy male can receive $1,000 a month up to age 65 for about $30 a month. His benefits would begin after 90 days.

Information provided by Ben Buenzow, State Farm Insurance, 3273 100th St., Urbandale, 270-8870.

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