Oh great…Now I’m sick & broke

A critical illness, a serious accident, even a difficult pregnancy are taxing enough on a family…they can happen at any time and with no notice.  You need to heal.  The last thing you want to have to think about is money. 

Ask yourself, if my doctor told me today that I cannot work for an extended period of time (one month, two months, six months, one year), what am I going to do for money?

Statistics say that an average of 2,370 disabling injuries occur every hour during the year.  You are much more likely to become disabled than to die.  The average time a person is disabled in America is three months.  Imagine, three months, no work, in pain, with little or no income. 

Do you need to worry about becoming disabled?   Make a list of the people you could call to get the money that you need to sustain yourself and your family) in the event that you could not work for three months.  Who could pay your mortgage, car payment, student loans, utilities, buy food and keep all of your insurances going while you recover?   How much would you have to borrow?  What would you have to sell?  Some people have a spouse or other family to rely on, which is great.  However, the vast majority of the people I know are either two parents working together to make it or single parents making it on their own.  Most people don’t have an emergency fund of three to six months living  expenses.  Most people are living paycheck to paycheck.

Now, while you are healthy, is a great time to review your company’s short and long-term disability policy.  You may be surprised to learn that because of expense and abuse, many companies have reduced or eliminated their short-term and long-term disability programs.  You may find that your disability benefits begin a full year after you have become disabled.   You may be shocked to learn that your disability plan lasts as long as your accumulated vacation days.  Or you may find out that your disability plan pays you 60% of your salary up to $200 per week (very common), for up to three or six months per year with no allowance for another disability or a larger salary.  Very bad if you have a series of bad things happen or your serious disability lasts longer than the plans benefit period or if you need more than $200 per week to pay your bill.

What can you do to protect yourself?  First of all, an emergency fund of at least three months perhaps up to six months of living expenses would be a wonderful starting point.  Yes, that is a lot of money.  A little bit put aside and left untouched each and every month over time can make all of the difference in the world when you need it.

Another thing you may want to consider is group disability coverage.  Some companies that have eliminated group plans or those that have slashed their group benefits may offer voluntary plans that you can purchase.  These plans are usually at reduced rates and can be very effective.  Or, you may be able to buy a private disability plan.  Either way, buyers beware.  Make sure your plan has the following provisions:

• Coverage that will pay you if you cannot do the duties of your job.

• Make sure that the benefit you select will actually help you.  If you need $3,000 a month to live, don’t buy a $1,000 per month plan in order to save money.  Don’t buy too much either.  You don’t want to be insurance poor. 

Work with a trusted advisor to get the best plan for you.

Johnita McBride can be reached at 480-344-7766, JMcBride@advisor-ins.com