- Married: No dependents—Their three children, ages 23, 27 & 30, are all married with plans to have at least two children by age 35
- Husband—age 55, earning $100,000 per year
- Wife—age 53, earning $125,000 per year
- Monthly living expenses = $6,000
- Current savings = $600,000
- Appraised Value: $750,000
- Loan Balance: $150,000
- Reasons For Coverage Now:
- Peace of mind— Knowing that your family will not have to suffer financially from a loss of income caused by a disability that prevents you from performing your job and losing your income.
- Reasons To Consider Coverage:
- Income replacement— Proceeds from a disability insurance policy can replace all or a portion of the wage-earner’s income lost due to disability.
- Complement to existing disability benefit plans— There are various public and private disability plans for which you might qualify, but they may not be sufficient to cover your financial exposure due to a disability.
- Not Currently Applicable To The Scenario:
- Limited savings— Without significant savings, the family’s living expenses would not be covered for an extended period of time, causing hardship.
- Sole wage earner in the household—The non-disabled spouse might be able to seek employment, but it is likely to take some time before employment actually begins, and the salary might not be sufficient to cover the family’s living expenses.
- Lock in a low premium and future insurability at a young age— Premiums for disability insurance will never be more affordable that they are today. Purchasing early guarantees that future events will not keep you from qualifying for coverage.
- Overview:This is a great example of a family who practiced fiscal responsibility during their lives together. There is very little reason to consider the purchase of disability insurance and if they carried disability insurance up to this point in their lives, it might be time to discontinue the coverage…..that is, unless their existing coverage adds to their peace of mind. Remember, most disabilitypolicies are discontinued at age 67, or to age 75 as long as you continue to work full-time and pay the increased premium. As an alternative, consider Long Term Care Insurance coverage as a potential replacement for disability coverage as you approach retirement.