When it comes to protecting one’s income, both life insurance and long-term disability policies are normally secured, right? After all, what’s more important than protecting your income if suddenly unable to return to work due to a long-term sickness, injury, or even worse, death was to occur.
Employees of larger companies are typically (hopefully) provided with some level of basic life and disability coverage and often there is a false sense of security regarding the protection offered and paid for by their employer. The sad fact is that the actual level of protection/security is usually way less than adequate income replacement.
The reality is that should a long-term disability of more than ninety days occur, the covered employee would only receive 60% of their salary, without a bonus. And that’s before taxes. Because it’s a monthly income, that 60% is more like 45%.
Cutting income down to 45% would put a heavy financial strain on maintaining current lifestyle. And there’s often a monthly cap to long-term disability of $5,000 to $10,000 pre-tax. Let’s say an executive earning a salary of $300,000 becomes sick or injured: his or her income would be reduced from $25,000 monthly to something more like $10,000 before income taxes. The net effect would be financially devastating.
The good news is there are real solutions available to increase levels of income protection and make sure that a long term disability ceiling doesn’t put an unnecessary cap on lifestyle.
While it has gotten more difficult to qualify medically for a personal disability policy, there are simplified underwriting and issue options that can be offered through a company on a voluntary basis, and at a discount, that can bring coverage levels closer to 75% or even 100% of income. The difference between 45% and 75%, or even 100% is HUGE.
Never forget… YOU are your biggest asset! Your ability to get up every day and earn an income is your “human economic value” and the most valuable asset you have. We fully protect our cars, homes, health and business… Why don’t we look to fully protect our incomes (and family) first, as close to full replacement value as possible? For in life cash-flow is everything.
Fred Kettler, Financial Coach
Kettler Financial – Serving the Greater Miami Community
Coral Gables – Pinecrest – Coconut Grove
1560 S. Dixie Highway Coral Gables, FL 33146
Securities products and advisory services offered through Park Avenue Securities LLC (PAS), member FINRA, SIPC. OSJ: 14021 Metropolis Ave., Fort Myers, FL 33912. 239-561-2900. PAS is an indirect, wholly-owned subsidiary of The Guardian Life Insurance Company of America® (Guardian), New York, NY. Kettler Financial is not an affiliate or subsidiary of PAS or Guardian.
2017-36377 Exp 03/2019