A while back my family was together playing a table game. As table games go, there was a lot of conversation. Somehow, the ladies in the family began discussing their favorite day of the week. As the conversation progressed one of the more sophisticated of the group said her favorite day of the week was payday. It did not matter what day it fell on, that was her favorite.
Much later that statement really had a greater meaning than just conversation. Yes, payday is a very important day to all of us that are dependent on a regular income. After all, it is important to have food, a roof over head, medical coverage, our utilities paid, and do not forget the need to pay our taxes. If that is not enough to worry about, there are the ever demanding needs of our children.
Have you ever thought about what might happen if you did not get your paycheck because of an illness or injury? It would be catastrophic for many to have that happen. A great way to insulate yourself from missing that ever important day is through disability insurance (DI). Another term used to describe this is “income protection.” If you depend on your ability to earn an income you should have disability income protection. It continues the payday if you become ill or disabled.
If you have the need for the DI protection, determining the right amount of coverage is the first step. As a guide, some recommend looking to see if there is coverage through your current employer. Most often, employer paid DI provides coverage up to about six months in duration. This is frequently referred to as short-term DI. Once you have that amount, you can begin to figure the dollar amount of coverage which now needs to be purchased. The monthly benefit amount can be estimated by adding up your fixed costs, to include your mortgage, utilities, food, clothing, misc. expenses and taxes.
Next, ask how long should the benefit period last? The benefit period is the length of time the benefits are payable for total disability. The answer to that is how long will you be ill? Obviously, you will not know the answer to that question. Thus, you should choose, as a minimum, two years for the benefit period. There are other options as well, but the maximum length of the benefit period is to age 65. All of this is described in the benefit section of your policy.
Tailoring a DI contract to your particular needs is done with the help of an experienced agent and disability income provider. For example, you might move to a new location or earn a salary increase as a result of a new position. Your agent has the ability to coach you through these changes. In addition, there are different riders you may add to your DI policy to make it fit your current situation. You will need guidance to determining the elimination period contained in all DI policies.
Disability income benefits are often tax free if you pay the premiums. You sometimes can receive base benefits in addition to Social Security Disability or even workers compensation benefits.
Yes, payday is a very important day. Think again how long you would survive if that day did not come for three or four times or even for several years. It might make a lot of sense to consider DI or income replacement coverage in your mix of protection.