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What is Disability Insurance?

Disability insurance provides you with financial security by replacing a portion of your income when an accident or illness causes you to be disabled and unable to work or earn an income.

The monthly benefit amount available is tax-free and will be based on the person's earned income. The maximum percentage of income available typically ranges from 40% to 75% of earned income.

Is Disability Insurance Important to You?

If you are like 65% of the working population, you haven't ever considered this question. Take a minute to review the following statements.

My investment income represents more than 50% of my total income.
My children will not need my financial help for their education.
I am prepared to sell my home in the event of financial difficulty.
If I were disabled, the government would take care of me.
I have no expensive hobbies.
I do not know anyone who has been disabled for a month or more.
My family would happily pay for all my living expenses if I could not.
My mortgage payment is less than 10% of my total income.
I could afford to take a two-year vacation.

If you answered "false" to any of the above questions, then disability insurance may be very important to you. In fact, anyone who works to earn an income and depends on that income to provide for their living and lifestyle expenses needs disability insurance.

Why then does 65% of the working population not have any form of private disability insurance? When asked, the number one reason is that they have never been told about it.

Most people own life insurance and understand the value it provides. They know that a premature death could have serious financial consequences for the people who depend on them. Perhaps these people should consider how different the consequences would be if they were to become permanently disabled.

Wouldn't their dependents be in a worse position than if they had actually died? Not only would their income stop, but they would become a financial drain on the scarce resources available to those dependents.

This drain would take the form of both on-going living expenses and the additional cost of medical expenses for the disabled person.

What is your greatest asset?

Potential Earnings Based on Current Annual Income With 3% Annual Increases To Age 65

Age $50,000 $60,000 $70,000 $80,000 $90,000 $100,000
25 3,770,029 4,542,067 5,278,170 6,032,080 6,786,206 7,540,174
30 3,023,076 3,627,725 4,232,411 4,836,946 5,441,649 6,046,245
35 2,378,748 2,854,530 3,330,327 3,806,015 4,281,821 4,757,570
40 1,822,948 2,187,564 2,552,182 2,916,724 3,281,346 3,645,949
45 1,343,509 1,612,233 1,880,951 2,149,619 2,418,332 2,687,052
50 929,938 1,115,944 1,301,941 1,487,910 1,673,897 1,859,899
55 573,190 687,837 802,480 917,111 1,031,745 1,146,392

A person who is currently 35 years old and earning $60,000 annually has potential earnings in excess of $2.5 million. Therefore, while a person’s car and home may certainly be valuable assets, the ability to work and earn an income is clearly a far greater asset.

Death vs. Disability

Most people are unaware of have common disabilities are. Often people have purchased life insurance to protect their families in the event of death. After all death is understandable, “inevitable” and visible. People see obituaries in the newspaper and they go to funerals. Events are generally not held for disability and, often, disability is invisible (e.g. deafness, back pain, heart condition, etc.) The result is that, while many people buy life insurance, most people don’t purchase disability insurance.
In fact, the odds are far greater that a person will become disabled in a given year that that he or she will die. The chart below shows there is at least a greater chance of suffering a disability of at least 90 days as compared to the chances of death in any given year. While death may be inevitable, disability is more probable at any give age.


Number per 1,000 Disabled

Number per 1,000 dying at given age

Chances of disability compared to chances of death




8 to 1




8 to 1




6 to 1




5 to 1




4 to 1




3 to 1

Why should I purchase disability insurance now?

As with most types of insurance, the older you get the more expensive the insurance coverage will become. Statistically, you may be more likely to become disabled as you get older. It is not guaranteed that you can be insured and as you increase in age, it becomes more difficult to acquire a disability insurance policy. More importantly, an accident or debilitating illness could strike at any time.

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