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Unexpected medical conditions can often derail the best laid financial plans. Could yours support you through a debilitating illness or injury? And if so, will it be at the sacrifice of some long-term objective?
The Solution
An individual disability insurance policy may help keep your financial goals on track by replacing a portion of your salary if you become disabled and unable to work. Without it, you may have to tap into monies set aside for retirement, funding a college education, or running a household.
According to the Council for Disability Awareness,1 "one in seven workers can expect to be disabled for five years or more before retirement." With this in mind, a disability insurance policy might be a valuable component of your financial planning.
The Facts
Disability insurance varies widely based on the issuer and the state in which you live. Be sure to speak with a licensed financial professional who can explain the policy provisions and benefits thoroughly, including:
- Costs
- Expected benefit payments
- Applicable exclusions, if any
- Basic hospitalization, basic medical, or major medical insurance, as defined by your state's insurance department
- The possible impact of Social Security and Medicare benefits on disability insurance payments
Action You Can Take—Today
Before you meet with a financial professional, there are steps you can take to prepare yourself and your family for a prolonged medical condition:
- Thoroughly review all your current and potential sources of income, identifying how a disability or illness may impact the amount of income generated
- Review the disability provisions in your employee benefits plan
- Start building an emergency cash reserve to cover living expenses for at least six months
- Gather and review information for any other existing disability insurance coverage you may have in force
1 2009 Council of Disability Awareness
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