“It Will Never Happen To Me…”

How Disability Income Insurance Can Help You Protect Your Financial Future

Guest Post By: Principal Financial Group

“It will never happen to me.” That’s what a lot of us think. In reality, however, illnesses and injuries can happen to anyone at any time. Nearly one in four of today’s 20-year-olds will become disabled before retiring.1

What constitutes a disability? Generally, when you become too sick or hurt to work, you are considered disabled. Many disabilities are short-lived—a pulled muscle, a sprained ankle or a serious bout with the flu. These types of illnesses and injuries typically don’t interfere with your ability to continue working and provide for your family.

Consequences of Illnesses and Injuries
But what if you suffer a heart attack? Or have a serious car accident and have to spend an extended period of time in a hospital (or worse yet, never fully recover)? What if you become gravely ill?

The financial implications can be disastrous. For instance, how would you make your house and car payments if you couldn’t work? Where would the money come from?

Other Sources of Income
Social Security provides a disability benefit, but the requirements for collecting benefits are very strict, and many people simply never qualify. Workers’ compensation only pays benefits if you become disabled due to a work-related injury or condition.

If your employer offers a group disability plan, that’s a good start. However, the coverage is often not enough. After taxes, most group plans only cover about 50percent of your income. A separate individual disability income (DI) insurance policy can help fill the gap.

Comparing Coverage
When comparing individual DI insurance policies, keep the following in mind:

  • Type of policy. Consider a non-cancelable, guaranteed renewable policy. This type of policy can only be canceled if you fail to pay premium and premium rates cannot be raised at any time for as long as you own the policy.
  • Insurer. You purchase insurance to make sure you get a specific result. That’s why it’s important to buy quality coverage from a reputable carrier.
  • Definition of disability. Look for a policy that considers you disabled if you cannot perform the duties of your regular occupation. This type of policy is called an “own occupation” policy. You should also check that the policy provides coverage for a partial/residual disability as well as a total disability.
  • How long your disability benefits last. This depends on your age, income and level of savings. Usually, the shortest benefit period is two years. Other policies pay for five years or to age 65. Buy the longest benefit period you can afford.
  • How long you wait to receive benefits. If your income stopped today, how long could you continue to pay your bills on your own? The answer to this question will help you determine how long of an “elimination period” you can handle. The longer the elimination period, the less expensive your policy.
  • What happens as your income and expenses increase. Make sure your policy includes the right to buy more coverage in the future – without having to re-qualify medically. If your health changes, you want a guarantee you can still buy more protection.

Remember, insuring your income could be the most important thing you ever do. Carefully research your options and work with a financial representative you know and trust.

10% premium discount1 for Ohio Psychological Association members.

1 Social Security Administration, Fact Sheet, Feb. 2013.

For more information, contact:
Jay Randall, Financial Advisor
Principal Financial Group
(614) 358-3265

Disability insurance has certain limitations and exclusions. For costs and complete details of coverage, contact your financial representative.

Principal Life Insurance Company, Des Moines, IA 50392, www.prinicipal.com

DI2202-1 | 05/2013


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