under 35, there is a 65% chance that you’ll experience an accident or long-term illness that will keep you out of work for at least six months and possibly for two years. And the bills don’t stop when you’re incapacitated. Social Security won’t take care of you, because less than 30% of Social Security disability applications are approved. The rules are so restrictive that it is nearly impossible to receive. There are few more grim statistics: 48% of all mortgage foreclosures occur because the homeowner did not have sufficient disability coverage; 36% of all small businesses fail for the same reason. After you use up your sick leave, most employers provide workers’ compensation, but that may offer only short-term disability coverage for up to 90 days at approximately half your current salary. Longer payments require lengthy applications, and compensation board hearings that may take six to nine months to approve a payment plan. Disability insurance replaces up to 70% of your income if you’re ill or injured for a lengthy period of time.
Getting through the days
These steps will help define your insurance needs
ACTION STEP #1:
Review your savings and retirement plans to see how much income you would leave behind before you choose an amount for an insurance policy.
ACTION STEP #2:
As with investments, do some homework and get objective advice before you sign on the dotted line. Call Insurance Information Inc., at 800-472-5800 for a review of your existing coverage for a fee of $50, and a recommendation of the best coverage available to you from up to three companies in your area.
ACTION STEP #3:
Phone at least one of the following quote services to get a proposal for comparison with your current insurance costs. Don’t be surprised if you have never heard of many of the companies that are presented to you. There are more than 3,000 national insurance companies, and many of them have good ratings but are not that well-known.
ConsumerQuote USA 800-552-SAVE or (www.consumerquote.com)
Direct Quote 800-845-3853
MasterQuote 800-337-5433 or (www.masterquote.com)
Quotesmith 800-431-1147 or (www.termquotes.com)
ACTION STEP #4:
Two publications from NICO will guide you through the process without obligation. A Buyer’s Guide to Insurance for $3.50 with a self-addressed stamped envelope and Taking the Bite Out of Insurance, for $12.95.
ACTION STEP #5:
Review your own assets, debts, retirement plans, and other obligations before you settle on an amount of coverage. Use www.smartcalc.com to help you determine how much life insurance you need before you call a broker. You can also get objective answers without a sales pitch from the customer service reps at Insuremarket at 800-695-0011.
ACTION STEP #6:
Call the human resources department of your company and find out how the company’s disability and workers’ compensation coverage works. This will give you an idea of how much you will need to keep in a savings account for an emergency.
* Low-load universal life insurance
From Wealth Happens One Day at a Time: 365 Days to a Brighter Financial Future by Brooke M. Stephens. Copyright (c) 1999. Published by arrangement with HarperCollinsPublishers, $19.95.