What is your most valuable tangible asset? It is not your investment portfolio, your farm, business or your home - it is your ability to earn a living. Consider a forty-year old male who earns $75,000 per year with an expected retirement age of 65; the future economic value of his accumulated income exceeds $4 million before wage inflation is even considered!
Many high achieving people are cavalier about protecting this valuable asset, even while piling on layers of life insurance to protect their family in the event of death. The reality is that you more likely to become disabled than to die prematurely, and the odds of becoming disabled are higher than you might think. In fact, a study suggests that a forty-year male has a 50% chance of becoming disabled for more than three months before age 65. Worse yet, if disabled for at least three months, this same fellow has a 50% of being disabled for life. Insufficient income protection is a key reason why many families encounter severe financial hardship when a breadwinner is injured or sick and can no longer support their standard of living.
Finally, Social Security disability benefits are notoriously difficult to qualify for and many employer sponsored group long-term disability insurance plans do not produce enough after-tax income to protect your standard of living.
At Living Wealth Advisors, we believe income protection is equally important risk management as life insurance, and we prepare a thorough disability income risk assessment as part of the Wealthcare planning process. When appropriate, we recommend disability income insurance solutions to plug this common breach in our client’s risk management program.
