Disability Insurance
description
Transcript of Disability Insurance
Presented By David C. Cochrane
Principal Financial Group
Based on the experience of Principal Life financial representatives and clients across America
From Here to SecuritySM
A Step-by-Step Guide to Income Protection
From Here to SecuritySM
While this communication may be used to promote or market a
transaction or an idea that is discussed in the publication, it is intended
to provide general information about the subject matter covered and is
provided with the understanding that The Principal
is not rendering legal, accounting, or tax advice. It is not a marketed
opinion and may not be used to avoid penalties under the Internal
Revenue Code. You should consult with appropriate counsel or other
advisors on all matters pertaining to legal, tax, or accounting
obligations and requirements.
A Step-by-Step Guide to Disability Income Insurance
Principal Life Insurance Company, Des Moines, Iowa 50392DI 2186-1 | 04/2009 | # 2980042011
WE’LL GIVE YOU AN EDGESM
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Why do you work?
• To pay the bills
• To secure your future
• To accomplish something
• To make your life work
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
What if you become too sick or hurt to work?
• What would happen to your income?
• How would you maintain your lifestyle? Pay your bills?
• What would happen to your retirement savings and other financial goals?
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
The time to address financial security is now!
• Back to the fundamentals.
• Risk protection products are critical.
• Americans looking for ways to be financially
secure.
A Step-by-Step Guide to Disability Income Insurance
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Three - step process
Step 1: Understand the need for income protection
Step 2: Protect your plan and your income
Step 3: Review your plan regularly
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
Step 1: Understanding the need
• 51.2 million Americans have some level of disability. They represent 18% of the population.
Source: U.S. Census Bureau, July 2006
• Almost 3 in 10 workers entering the workforce today will become disabled before retirement.
Source: Social Security Administration, Fact Sheet, January 2007
• The average duration of a long-term disability is 30 months.
Source: JHA Disability Fact Book, 2006
A Step-by-Step Guide to Disability Income Insurance
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
Disabilities play no favoritesThe causes of disability may surprise you. Here’s a typical breakdown (by percentage of claims) of some typical reasons an individual may become disabled.
A Step-by-Step Guide to Disability Income Insurance
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Step 2: Protect your plan and your income
Disability income insurance has certain limitations and exclusions. For costs and complete details of coverage, contact your Principal Life financial representative.
How solid is your financial foundation?
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
What is your most valuable asset?
Your home may be your biggest asset, but your ability to work and earn an income is your most valuable asset.
1 carbuyersnotebook.com, February 20082 Average U.S. existing home sale price, 2008, National Association of REALTORS®, www.realtor.org.3 Projected cumulative income, 35-year-old earning $6,250/month assuming 4% annual increase to age 65
What is your earnings potential?
Potential Earnings to Age 65 (with 5% annual salary increases)
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
Available disability income sources
• Savings
• Borrowing
• Group long-term disability insurance coverage
• Social Security
• Worker’s Compensation
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Savings
• Most people don’t have enough savings.
• One year of disability could wipe out your savings.
• You won’t be able to continue saving for retirement.
Borrowing
• What bank will give you a loan without any income sources?
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
Group long-term disability (LTD) insurance coverage
• Excellent employer-provided benefit – and a great start to your foundation
• Benefits usually taxable and have limits
A Step-by-Step Guide to Disability Income Insurance
Chart based on $6,250 gross monthly income ($75,000 annual), with 60% group LTD insurance, assuming a 30% tax bracket for Federal, State and FICA
Could you live on only 42% of your income?
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Social Security
• Initially deny 65% of all claims
• Must meet four conditions
• Six-month waiting period
• Benefits typically replace only a fraction of pre-disability income
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
Workers’ Compensation
• Covers only work-related illness or injury on the job
• Coverage and benefits vary
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
You have a lot to lose
A Step-by-Step Guide to Disability Income Insurance
• Current standard of living
• Future earnings
• Your home
• Retirement savings and other assets
• Insurability
• Credit rating
• Peace of mind
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Protect your ability to work and earn an income
with Individual Disability Income (DI) insurance from
Principal Life Insurance Company
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
Individual Disability Income insurance
• Premiums and benefits are guaranteed through age 65
• Tax-free benefits (when paid with after-tax dollars)
• Quality benefit provisions
• Can be used as stand alone coverage or can supplement existing group disability insurance (if available)
• Bonuses and incentive pay can be covered
• Policy and discounts are fully portable [remove if not a worksite offering]
• Payment options available (employer-paid or employee-paid) [remove if not a worksite offering]
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
Step 3: Review your plan regularly
• Pick a day you’ll remember
• Some events demand immediate attention
A Step-by-Step Guide to Disability Income Insurance
• Marriage or divorce
• Birth or adoption of a child
• Children graduating from college or leaving home
• Inheritance or other windfall
• Major increase in debt, including the purchase of a new home
• Paying off the mortgage
• New job or promotion
• Death of a spouse
• Changing a beneficiary
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What your review may discover
1. You’re well protected
2. Your situation has changed and your coverage can be adjusted to reflect the change
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
What are the next steps?
• Review the From Here to Security materials
• Schedule a From Here to Security Review
A Step-by-Step Guide to Disability Income Insurance
From Here to SecuritySM
How Can David Help?
• Determine appropriate coverage based on your personal situation
• Determine appropriate policy features and riders
• Help complete forms
• Regularly review your plan
• Help submit any claims for benefits
A Step-by-Step Guide to Disability Income Insurance