Why and When Disability Insurance Matters

/// By Aviva Sapers

Unfortunately, many don’t realize how important disability insurance coverage is until they actually need it. For many, this realization may come too late. At least once a year, we think it’s important to take a closer look at the protections that disability insurance can provide and the consequences that not having it can have on your family and finances.

The primary purpose of disability insurance is to protect your income and savings in the event of unforeseen circumstances with illness and injury. You and your spouse’s ability to work not only sustains your current lifestyle but also fuels your aspirations for the future. Perhaps counterintuitively, it is now, when you are still healthy and actively earning, that it’s essential to consider how a disruption to your income could impact your overall financial well-being.

While your primary goal is likely to cover your day-to-day living expenses with your earnings, it’s equally crucial to gather to use some of your current earnings for savings for retirement and to  accumulate wealth. This surplus serves as your safety net and allows you to pursue long-term goals, whether they involve homeownership, education, travel, or retirement.

The reality is that life can and will throw unexpected challenges our way. If you were to suddenly find yourself unable to work due to illness or injury, your expenses wouldn’t go away—and would more likely increase significantly due to medical bills and associated costs. What was once a relied upon mainstay could quickly diminish or disappear, leaving you and your family in a precarious financial situation.

Many assume that a workplace disability policy will cover the income loss in times of need. But the typical coverage provided by an employer disability policy only replaces around 60% of your income and only for a set amount of time. Workplace coverage is typically calculated on your base salary and may carry a monthly cap, which could leave higher earners with a significant shortfall if they were to become disabled. Supplemental disability insurance can be purchased to provide added protections to fill the shortfall and time restrictions—ensuring that you have sufficient income protections to meet financial obligations during difficult times.

Before retirement, your earning potential is arguably your most valuable asset. Protecting this economic source for as long and extensively as possible is essential for safeguarding your family’s financial future. By securing adequate disability insurance coverage, you can mitigate the financial dangers of unexpected events and continue working towards your personal and family goals with peace-of-mind.

At Sapers & Wallack, we specialize in helping individuals evaluate their insurance needs to find the right coverage for a tailored approach to protecting themselves and their loved ones. Our team is here to guide you through the process and ensure that you can be confident that your income is safeguarded, no matter what surprises the future may hold.

Tax and legal advice is not offered by Lion Street Financial, LLC.

Aviva can be reached at:

asapers@sapers&wallack.com