I am a working professional looking to attain insurance coverage, where do I begin?
The first place to begin is to find a qualified insurance advisor who can help guide you in protecting your future. The three main types of insurance are:
- Life Insurance
- Critical Illness Insurance
- Disability Insurance
Life insurance is meant to protect your loved ones upon your passing when you can no longer provide financial support to them. Critical Illness Insurance acts as a living benefit that provides a lump sum amount of chosen coverage upon 30 days of survival after the diagnosis of any of the covered conditions.
For the purpose of this post, the focus is on Disability Insurance.
What – Disability Insurance is meant to replace a portion of your income if you are unable to work due to injury or illness.
Who – In order to qualify, you must be a working individual who has attained proof of two years income
Where – Make sure you applying with an insurance company who has a full suite of disability insurance services that include all of the different options, such as Future Income Option, Cost of Living, Own Occupation, Residual Income, Return of Premiums, etc.
When – The best time to apply is as soon as you begin working. As your income increases, you have the ability to increase coverage to be in line within you new income.
Why – The main purpose of attaining coverage is to make sure you can pay your bills and not go broke in the chance you were to become disabled and unable to work and make an income.
How – In order to apply, you must complete an application with a registered insurance company and pass a medical examination. At that time and upon approval, you will be offered a contract based on your applied for plan.
How Much – The maximum amount of disability insurance a person can attain is 66 and 2/3rds of their annual salary.
The above points apply to anyone who is either employed or self employed looking to attain disability insurance. Please keep in mind, if you are employed, there is a chance you already have coverage through your employer and can thus only add coverage as a top up due to the maximum amount requirements. A few other important differences between employed and self-employed individuals are:
- Contact definitions
- Employee benefit disability insurance plans have an Own Occupation rider for the first two years and then switches to Any Occupation.
- An individual disability insurance plan does not switch definitions through the contract.
- Future Increase Options
- Employee benefit disability insurance plans will only allow your coverage to increase to certain maximums with out medicals
- An individual disability insurance plan that has a Future Income Option built in does not restrict you as much
- Leaving your employer
- Employee benefit disability insurance plans end when you leave your employer. Some can be carried forward but as very high premiums.
- An individual disability insurance plan does not end when you leave your employer.
Samuel Waxman, CFP, CLU, CHS
Managing Partner and Financial Advisor, Millennial Financial Group