What's Your Greatest Asset? - It's Not What You Think

Image via WikipediaYour dreams of owning a house, sending your kids to college, and saving for retirement are based on you having a long and fruitful working life. Your income and your ability to produce income is critical to making your dreams come true. Then why is it when the nonprofit Life Foundation conducted a survey asking "What was your greatest asset?", only one in six working Americans (16%) said their paycheck was.

Think about what would happen if tomorrow you became sick or injured and could not work. Your inability to work would be devastating to your life and your families.

If a 25 year old worker that earned $50,000 a year, were hurt or disabled, that worker would lose $3.8 million in future earnings. Yet fewer than one in three workers in the private sector have long-term disability coverage through work, according to the U.S. Department of Labor.

“Most people don’t realize that they have a three in 10 chance of suffering a disabling illness or injury that could keep them out of work for three months or more,” said Marvin H. Feldman, President and CEO of the LIFE Foundation.

What we forget to insure is our greatest asset, our income. Disability Insurance makes sure that financial hardship doesn’t follow the physical and emotional toll that comes along with disability. When you think about it, your most valuable asset isn’t your home, car or jewelry. It’s what allows you to pay for all these things—it is your paycheck.

How Much Does it Cost?

• Expect to pay between 1 percent and 3 percent of your annual salary for a good disability plan, according to DisabilityQuotes.com. That works out to $600-$1,800 for someone earning $60,000 a year.
• Disability insurance provides income to help pay your living expenses if you are unable to work for a significant length of time because of injury or illness. Generally benefit payments are 60 percent of your total salary.
• Short-term disability polices have a waiting period of 0-14 days and pay benefits for no more than two years. Long-term disability policies usually have a waiting period of several weeks to several months and benefits could be paid a few years up to the rest of your life, depending on the policy terms.
• States such as Hawaii, New Jersey, New York and Rhode Island requires employers to provide disability benefits for up to 26 weeks, according to the Insurance Information Institute. Some employers provide short-term disability insurance, although often the employees have to pay the premiums.

Discounts:

• Premiums are lower for policies with a longer waiting period before benefits begin and/or a shorter benefit period.

Shopping for disability insurance:

• The Federal Citizen Information Center gives a detailed overview of long term disability insurance, listing common terms and tips for buying.
• Insurance4USA.com provides online quotes.
• Your state insurance department can give you a list of registered disability insurance companies in your area. The National Association of Insurance Commissioners gives links to these state offices and has a database to search for financial details and complaint histories for specific companies.

Remember Disability Insurance will cost more than life insurance. Statistically you're more likely to file a claim for disability insurance than life insurance. Depending on the type of work you do, the rates will vary. The costs will vary greatly depending if you sit at a desk all day or work construction.