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Financial Planning

Disability and Your Finances for Fortune 500 Employees

 

As an Fortune 500 employee, you should be aware that the Social Security Disability Insurance program distributed $143.7 billion in benefits in 2018. And with new applicants each year, the system's reserves are projected to be depleted by the end of 2034 if nothing is done.

Instead of relying on a government program to secure their income in the event of a disability, many people prefer to protect themselves with personal disability insurance.

Disability insurance provides protection by replacing between 50 and 70 percent of your income if you become disabled due to an injury or illness. Due to the fact that a disability can be a double financial burden, this form of insurance may be of great benefit. Those who become disabled frequently find themselves unable to work and burdened by unforeseen medical expenses.

What About Workers Comp?

Numerous individuals view workers' compensation as a disability safety net. However, workers compensation benefits are only paid to those who become disabled on the job. If your disability was caused by a car accident or other non-work-related incident, you may not be eligible for workers' compensation.

We would like to inform our Fortune 500 clients that each state determines its own rules for workers' compensation payment and benefits, so coverage can vary substantially. Especially if you have a high-risk occupation, you may wish to investigate what your state provides and plan to supplement coverage if necessary. Similarly, if any of our Fortune 500 clients have an active lifestyle that increases their risk of disability, it may be prudent to consider an additional layer of protection.

Personal disability insurance can be structured to pay weekly or monthly benefits in the event of disability. If you have paid your premiums in full, benefits are not taxable.

When purchasing a policy, you may be able to customize coverage to meet your specific requirements. You may be able to modify benefits or elimination periods, for instance. You may choose comprehensive protection or select to define coverage more precisely. Some policies additionally provide coverage for partial disability, cost-of-living adjustments, residual benefits, survivor benefits, and pension supplements. Since insurance is intended to supplant income, the majority of individuals elect to purchase protection only during their working years.

Even as modifications are made to federal disability programs, they typically provide only a modest supplementary income, and eligibility can be challenging. For Fortune 500 employees who do not wish to rely solely on the federal government in the event of an accident or illness, disability insurance may be a prudent method to protect their income and savings.

Out of Commission

According to the most recent data available, approximately 19.6% of disabled Americans of working age are employed.

Chart Source: ACLI Life Insurers Fact Book 2018

Administration of Social Security, 2019
Participating insurance companies issue disability insurance. Not all states offer all policy categories and product features. Any obligations are contingent on the issuing insurance company's capacity to continue paying claims.
This information is not intended to serve as tax or legal advice. It is prohibited from being used to evade federal tax penalties. Changes in federal and state laws and regulations could have an effect on after-tax investment returns. Consult a tax or legal expert for information pertinent to your specific circumstances.

Added Fact:

According to a study by the Harvard Business Review, the average duration of a long-term disability claim is 34.6 months. This means that if a Fortune 500 employee were to experience a disabling injury or illness, they could potentially face more than two and a half years without their regular income. Understanding this potential financial strain, it becomes crucial for Fortune 500 employees to consider the importance of personal disability insurance as a means of protecting their financial well-being during such circumstances. By having the right coverage in place, they can have peace of mind knowing that they have a safety net to rely on in the event of a disability. (Source: Harvard Business Review, "The Disability Disconnect: How Workers' Compensation Fails to Protect All Workers," March-April 2019)

Added Analogy:

Navigating the potential risks of disability without proper financial protection is like walking a tightrope without a safety net. As Fortune 500 employees, you have worked hard to build your financial stability, but an unexpected disability can throw your finances off balance. Just as a safety net provides security and peace of mind to a tightrope walker, personal disability insurance offers a layer of financial protection. It ensures that if you were to experience a disabling injury or illness, you won't be left dangling in uncertainty. Disability insurance acts as a safety net, catching you and providing a portion of your income to maintain your financial equilibrium. By securing disability insurance, you can confidently step onto the tightrope of life, knowing that even if you stumble, your financial future is protected.

Securities offered through FSC Securities Corporation, member FINRA/SIPC and investment advisory services offered through The Retirement Group, LLC, a registered investment advisor not affiliated with FSC Securities Corporation. Although FSC is a signatory to the Broker Protocol, TRG is not. The removal of PII from FSC under the Broker Protocol is a violation of the Privacy Policy. Representatives are securities registered and are able to service clients in the following states: ALABAMA, ARIZONA, ARKANSAS, CALIFORNIA, COLORADO, FLORIDA, GEORGIA, ILLINOIS, INDIANA, KANSAS, MASSACHUSETTS, MICHIGAN, MISSISSIPPI, MISSOURI, NEVADA, NEW HAMPSHIRE, NEW JERSEY, NEW YORK, NORTH CAROLINA, OHIO, OKLAHOMA, OREGON, PENNSYLVANIA, SOUTH CAROLINA, TEXAS, TENNESSEE, WASHINGTON, WISCONSIN.

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