Four Situations and Its Disability Planning Solutions
You might be thinking…
Other people get disabled, not me.
My business can run without me.
I’d rather put my money into growing my business.
The truth is illness and injury impact all of us, even businesses. Whether you are a key employee or business owner, understanding the possible outcomes of a temporary or permanent disability will help you to identify smart solutions for your financial plan.
Let’s look at each situation and its solution.
1. As a high-income earner, having both a workplace policy (group long-term disability insurance) and a private policy (individual disability insurance) helps to ensure that you will have adequate income protection for everyday living expenses like mortgage, utilities, and groceries.
2. Suffering a disability does not mean that you must stop contributing to your retirement account. Having a disability retirement security policy helps you to make that dream a reality; it pays benefits to a trust to be accessed as retirement income.
3. The worst thing that can happen to a business owner is when s/he can no longer keep the business open. Having overhead expense insurance helps you to pay for necessary expenses like employee salaries, accounting fees, and office rent. The key benefit here is that you can either return to your financially sound business or sell the business that has not depreciated because of your disability.
4. As a business owner, it’s crucial that you have a funding solution for your business should you or another owner become too sick or hurt to work. Disability buy-out insurance funds a buy-sell agreement helping to buy-out the disabled owner’s interest in the event of a long-term disability. Benefits are typically tax-free, and the disabled owner is taxed only on the gain from the sale of the business.
If you are the main income earner in your family, even if you have group long-term disability insurance, it may not be enough to pay your basic living expenses as the benefits are taxable if your employer pays the premiums. You can consider buying an individual disability insurance policy that can supplement your current group coverage. Individual policies are not tied to employment that offers more flexibility as you may decide to change your job. Some policies can have an automatic increase in benefits feature based on your earned income without going through underwriting.
According to the Centers for Disease Control and Prevention, one out of four adults in the U.S. will suffer some type of disability. You work hard for your family and/or business, so make protecting your income a priority. Remember that a disability is more than just an accident. It can happen to anyone, anywhere, anytime. To get started on a complimentary disability plan review, schedule a time with the Echo Wealth Management team and together, let’s take the necessary steps to protect the financial future of your loved ones, business, and/or key employees.