Have Questions About Disability Income Insurance? Here Are Some Answers.

An often overlooked but key area of your overall protection strategy is the need to protect your income stream if you are unable to work due to illness or injury. Think about the financial impact if you were unable to earn a paycheck for an extended period.

Disability income insurance is designed to protect against that risk but is a type of insurance many aren’t familiar with. Here are answers to many questions we frequently hear from clients:

Q: What is the chance I might be subject to a disability-related event?
A: It may be more likely than you think. It is estimated that more than one in four of today’s 20-year-olds will miss at least a year of work because of a disabling condition before they reach retirement age1

Q: What if I don’t work in a high-risk occupation?
A: The fact is that injuries can happen anywhere, not just on the job. An injury could result from a car accident, a bad fall, a mishap working around the yard or even a sport. Then, there are more debilitating illnesses. COVID-19 reminded us all of our vulnerability and that some illnesses have debilitating effects for an extended period.

Q: What can disability income insurance do for me?
A: Disability income insurance provides a source of monthly income to replace what is lost if you are unable to work. This is important to help pay for your household expenses on an ongoing basis. Funds can also help you keep pace with savings for monumental goals in your life such as retirement or your child’s college education.

Q: Do I really need disability income insurance? What about the financial support from my occupation or the Social Security disability program?
A: Employer-provided policies, if offered, often pay the equivalent of about half your salary, but these benefits are generally subject to income tax, leaving you with a gap to bridge to meet your needs. Social Security benefits are not always easy to qualify for, may take months before payments are approved and often pay only a modest amount (the average monthly benefit is $1,2341). These two options leave large gaps for most people.

Q: What financial support would I receive from a disability income policy I purchase?
A: Disability income insurance will typically pay in the range of 60 percent of your income, depending on how your policy is structured. Premiums are paid with after-tax dollars, so the benefits will not be taxable. On an after-tax basis, the disability income benefit should come very close to matching your regular income from work.

Q: Will a disability income insurance policy protect me if I can’t work in my specific field or if I can’t work at all? 
A: This depends on the type of policy you choose. With an “own occupation” policy, you can collect benefits if you are unable to work at your regular occupation. With an “any occupation” policy, you are only eligible to collect benefits if you can’t work at all.

Q: How soon do benefits begin?
A: This also depends on how your policy is structured. Policies come with an elimination period, ranging from 30 days to 180 days. This is similar to a deductible on your auto insurance. For example, if you have a 60-day elimination period, you won’t receive benefits for the first two months you are disabled. A longer elimination period will lower the cost of your policy but widen the income gap you will need to be prepared to fill. 

Learn more today.
Disability income insurance should be included in a review of your overall protection needs. Consider talking to your financial advisor or insurance specialist about what it can do for you.

1Social Security Administration, “The Faces and Facts of Disability.”

###

Phil Decallejon, CFA®, is a Financial Advisor with Orchard Financial Group, a private wealth advisory practice of Ameriprise Financial Services, LLC. in Los Angeles, CA. He specializes in fee-based financial planning and asset management strategies and has been in practice for 8 years. 

To contact him: https://www.ameripriseadvisors.com/phil.decallejon/ | OrchardFinancialGroup@ampf.com | (310) 582-3500 | 12400 Wilshire Boulevard, Suite 1210, Los Angeles, CA 90025

Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.

Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.

Ameriprise Financial Services, LLC. Member FINRA and SIPC.

© 2021 Ameriprise Financial, Inc. All rights reserved.

File #3640201-RUSH (Approved until 08/2023)

Related Posts

Iconic Cheese Store of Beverly Hills Relocates After 50 Years

July 26, 2023

July 26, 2023

Big news in the LA food world! The Cheese Store of Beverly Hills, an LA institution and one of the...

Convert Your Analog Memories Into Digital With Westside Video Services

February 14, 2023

February 14, 2023

Sam Najah’s Westside Video Services bringing memories back to life By Susan Payne The boxes of 8mm and 16mm film,...

Five of the Most Commonly Overlooked Car Maintenance Services

January 12, 2023

January 12, 2023

From running errands on the Westside  to grabbing dinner with friends in Marina Del Rey, having a reliable car is...

Maintain Natural Results With the SkinTight Experience

November 2, 2022

November 2, 2022

By Susan Payne In the anti-aging world of aesthetics, it can be easy to overdo procedures that treat conditions such...

‘You’ll Swear It’s Real’: Plant-Based Burger Joint Honeybee Burger Offers Fresh Take on Veganism to Angelenos

September 10, 2022

September 10, 2022

By Susan Payne No actual honey. More than burgers.  A California restaurant is on a mission to make plant-based food...

Zebra Construction Takes on Balcony Laws

August 22, 2022

August 22, 2022

Company growth attributed to trust, old school values By Susan Payne Every building with 3 or more units in the...

Best of Pacific Palisades Awards Voting Now Open

August 10, 2022

August 10, 2022

Cast your vote to support your favorite local businesses  Voting is now open for Palisades News’ annual Best of Pacific...

Must-Watch ‘Disruptive’ Appliance Experience Store Opens in West Los Angeles, Hosts Grand Opening in June

May 27, 2022

May 27, 2022

Howard’s West Los Angeles Experience Center opening at 900 La Brea Boulevard  By Susan Payne West Los Angeles is home...

Column: Tackling Childcare Costs

April 7, 2022

April 7, 2022

Finding affordable, quality childcare is essential for many working parents. The current shortage of care options is helping drive up...

Interview With Santa Monica-Based AI Entrepreneur Nektar Baziotis

March 22, 2022

March 22, 2022

Below is a brief interview with Nektar Baziotis, co-founder and CEO of Apogee information Systems Luxembourg, President of ENKI Inc....

Local Business Closing After 20 Years On Main Street

January 28, 2022

January 28, 2022

The owners of Arts & Letters say goodbye to the community after 20 years of business. Learn why they are...

Pandemic Propels Lifelong Educators to Open New Preschool in the Palisades!

January 26, 2022

January 26, 2022

By Susan Payne Look out, Palisades: Two educators with more than 50 years combined experience are opening a new preschool...

Wardrobe Stylist Partners With Vince. To Deliver Free Holiday Styling Event for Men

December 2, 2021

December 2, 2021

Dress to impress this season with a custom look from Brandi Titkos x Vince. By Susan Payne Menswear wardrobe consultant...

Five Tips for Transitioning Into Retirement

November 16, 2021

November 16, 2021

Retirement marks the end of a chapter in your career and the start of a new lifestyle. This unique transition...

The Financial Realities of IVF and Adoption

October 15, 2021

October 15, 2021

For those unable to conceive a child through traditional means, there are alternative options to consider, such as adoption and...