Life and Health

As any financial advisor worth his or her salt will tell you, if you have loved ones who depend on your income, a life insurance policy is a must-have. If you were to die, an effective life insurance plan will ensure that all your family’s financial needs will be covered—from the monthly mortgage and utility bills to your child’s college education. Without life insurance, your family could find themselves in dire straits if something happened to you.

Unfortunately, this advice often falls on deaf ears. In 2008, 68 million Americans still did not have any life insurance, according to the Life and Health Insurance Foundation for Education. On top of that, most people who do have life insurance don’t have enough coverage to fully support their family.

If you do not own any life insurance or have minimal coverage, here are three things you might want to consider:

1. Everyone needs life insurance.

Many people mistakenly assume they have no need for life insurance because their children are grown and no longer require financial support. What these people don’t realize is that life insurance coverage can be used for much more than supporting their loved ones.

For example, the payout from your life insurance policy could be used to cover your final expenses, including medical bills, estate taxes and funeral expenses. Considering that the average funeral costs $10,000 or more, do you want to leave this heavy financial burden on your loved ones’ shoulders?

You can also designate life insurance proceeds to help fund a grandchild’s college education or even donate them to your favorite charitable organization.

2. Three times your income June not be enough.

Some people say the best way to determine the amount of life insurance coverage you need is to simply multiply your annual income by three. However, this amount June not be enough. What if your spouse who is unable to work lives many more years after you die? Three years worth of income will not be nearly enough to support your spouse for another eight, ten or even 20 years.

This is why many professionals say the “three times your income” method is not always a good rule of thumb. Figuring out the right amount life insurance requires a comprehensive evaluation of your financial goals, debts, investments, lifestyle and habits.

3. You’re never too old to buy life insurance.

Many seniors believe they are too old to worry about life insurance because they no longer have loved ones relying on their income. But once again, a life insurance policy can help cover your final expenses after you die so your family is not left with the bill. Before you discount life insurance, it’s important to know all the facts. These valuable insurance policies can protect your family’s financial well-being, pay off your final expenses and even fund a loved one’s home purchase or college education.

Of course, whether or not you qualify and how much you will pay for life insurance depends on your age, health and the type of insurance you want to purchase. If you are considering buying life insurance, you June want to meet with a financial advisor or insurance agent, who can help you determine how much and what kind of life insurance you need.

One thing is certain: everyone should consider purchasing life insurance. After all, your family’s happiness could depend on it.

The goal of Life insurance is to ensure your family is protected financially if something were to happen to you. If your loved ones depend on your income, they could find themselves in serious financial stress if that cash flow was suddenly cut off.

Unfortunately, too many consumers mistakenly believe that they have enough Life insurance — when in actuality, they are severely underinsured.

Just look at the numbers: Americans have a combined $10 trillion worth of Life insurance coverage, according to a 2008 study by the American Council of Life Insurers. That June seem like an incredible amount of insurance — however, it’s still not enough. As a matter of fact, $10 trillion represents only 72% of our nation’s combined annual income, which totals a whopping $14 trillion.

Delving deeper than the lump sum

When you look at your coverage as a lump sum, it might seem like a lot of money. However, it’s important to consider that lump sum in relation to your annual income.

When determining whether or not you have enough insurance, ask yourself a few important questions: How much do I earn each year? How many years would I want my family to be covered if something were to happen to me? How much is going to be enough to cover all of their expenses? What standard of living do I want them to have?

The answers to these questions might lead you to a realization: That you don’t have enough Life insurance.

Calculating the right amount.

There are a few different ways to calculate the amount of Life insurance you need to protect your family adequately. Some insurance experts say you should simply multiply your annual income by three, while others say you need at least eight times your annual salary.

However, many professionals say this “income multiplication” method is not accurate enough. Because each family faces a unique set of circumstances and needs, you might want to consider some factors other than just annual income. Figuring out the right amount of Life insurance requires a comprehensive evaluation.

Here are a few things to take into consideration:

• Monthly expenses: Tally up all your family’s monthly expenses, including your mortgage payment, car payments, utilities, groceries, food, clothing and any other costs. The death benefit on your Life insurance policy should be able to cover these expenses for at least a few years. This will ensure that your family will not undergo a decreased standard of living if you were to die.
• Surviving parent’s income: If something were to happen to you, would your spouse need to work to support your children? This could be a problem if you have young children or a disabled child who needs extra attention. This will ensure that the surviving parent doesn’t have to work — or at least not until your children are older.
• College tuition: Do you want to fund your children’s college education? If so, you should also factor this into your Life insurance calculation. It would probably be difficult for the surviving parent to pay college tuition on a single income.
• Factoring in inflation: Don’t forget to consider the cost of inflation. You can expect cost of living to increase about 4% to 5% each year. That means if you purchased a Life insurance policy many years ago, the death benefit might not be enough to pay for today’s cost of living — let alone tomorrow’s.

Figuring out how much Life insurance you need to protect your family is a complex process that involves considerable research and thought. If you’re struggling to figure out how much Life insurance is enough, consider meeting with one of our experts. We can help you to determine how much insurance you need and what you can realistically afford.

A Health Savings Account (HSA) is an alternative to traditional Health insurance that offers consumers a different way to pay for their health care. HSAs enable you to pay for current and future health expenses on a tax-free basis, while an attached high-deductible insurance policy protects you against catastrophic expenses.

Here are answers to some common questions concerning HSAs:

Can anyone open an HSA?

To be eligible for an HSA, you must be under 65 years old, and covered by a Qualified High-Deductible Health Policy (QHDHP).You are ineligible if covered by another Health insurance policy (except coverages such as Cancer, Dental, Disability, Long-Term Care or Vision insurance) that isn’t a qualified high-deductible plan.

Where can I open an HSA?

Accounts can be established with banks, credit unions, insurance companies, and other approved companies. Your employer might also set up a plan for its employees as well.

What is a QHDHP?

To qualify the policy must meet current IRS requirements. For 2009 the requirements are as follows:

• The deductible must be at least $1,150 for individuals or $2,300 for families.
• The annual out-of-pocket expenses cannot be greater than $5,800 for an individual or $11,600 for a family. These figures include the deductible and any co-insurance, but not the premiums.

How much can I contribute to an HSA? What happens to unused funds at the end of the year?

Limits are updated annually by the IRS. For 2009, the contribution limits are $3,000 for singles and $5,950 for families. However, if you are 55 or older, you can contribute an extra $1,000.

The unused balance in an HSA rolls over automatically year after year. You won’t lose your money if you don’t spend it within the year.

How do I receive the tax benefits?

If you have an HSA through your employer, you might be able to make pre-tax payroll contributions. Otherwise, your contributions will be deductible when you file your taxes, even if you don’t itemize. Also, you are eligible to make a full contribution regardless of income unlike IRAs.

What is a qualified medical expense?

Qualified medical expenses are defined in IRS Publication 502, Medical and Dental Expenses (available at www.irs.gov).

Can my HSA be used to pay for a family member’s medical care?

Yes, you June withdraw funds to pay for the qualified medical expenses of yourself, your spouse, or a dependent without tax penalty.

Can I pay Health insurance premiums with an HSA?
You can only use your HSA to pay Health insurance premiums if you are collecting unemployment benefits or you have COBRA continuation coverage through a former employer.

Can I use the money for non-medical expenses?

Yes, but you’ll be hit with a 10% penalty plus income tax on the amount of your distribution. However, after age 65 the 10% penalty is waived on non-qualified distributions which enables your HSA to effectively serve as a retirement supplement.

I have an HSA but no longer have HDHP coverage. Can I still use the HSA?

Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.

With an HSA can I still contribute to an IRA?

Absolutely, your HSA contributions won’t affect your ability to contribute to an IRA in any way.

If you participate in a High Deductible Health Plan (HDHP), you have the opportunity to take advantage of a federal income tax break by saving and paying for health care expenses through a Health Savings Account (HSA). Contributions you make to your HSA are deductible from your gross income, earnings on your HSA funds grow tax-free, and withdrawals used to pay for qualified medical expenses are tax-free.

HSAs might be established by employers for their employees, or by individuals outside of an employer-based plan. Regardless of whether your HSA is through your employer or established individually, you will be responsible for some reporting and record keeping requirements. These tasks are not extensive or burdensome, but must be followed so that you receive the tax advantages that the HSA offers.

Reporting HSA contributions. IRS Form 8889 is the key reporting vehicle for HSAs. Form 8889 is used to report HSA contributions, figure your HSA deduction, and report any HSA distributions. Contributions you make, and those made by anyone else on your behalf, including contributions made by your employer, must be reported. Employer contributions will be shown in Box 12 of your W-2, and will be coded with a “W.” You also will receive a Form 5498-SA from the HSA trustee, which will show the amount contributed to your HSA during the year, from all sources. You must file a Form 8889 with your federal income tax return if, during the taxable year, contributions were made to your HSA, you received distributions from your HSA, or you acquired an interest in an HSA due to the death of an HSA account beneficiary.

Figuring your HSA deduction. Form 8889 instructions walk you through the process of calculating the deduction allowed for HSA contributions. The amount of your deduction is limited to the IRS maximum (up to $3,000 individual/$5,950 family for 2009), and is reduced by any HSA contributions made by your employer. You enter the deductible amount as an adjustment to your gross income on your federal income tax return. If both you and your spouse have an HSA, IRS Publication 969 explains how to handle the reporting for this situation. You also use Form 8889 to calculate whether excess contributions were made to your HSA. Excess contributions receive no tax preference and generally are subject to a 6% excise tax (unless timely withdrawn). Excess contributions, if made by your employer and not included in Box 1 of your W-2, should be reported as “Other income” on your federal income tax return.

Reporting HSA distributions. The HSA trustee reports distributions on IRS Form 1099-SA. HSA distributions used to pay for qualified medical expenses are free from tax. However, you still must report these on Form 8889. Distributions used for something other than qualified medical expenses are taxable, and subject to a 10% additional tax. Report taxable HSA distributions as “Other income” on your federal income tax return. Use Form 8889 to calculate the additional 10% tax, and report this in the “Other tax” section of your federal income tax return.

HSA Recordkeeping. According to IRS Publication 969, HSA accountholders must keep records sufficient to show that:

• HSA distributions were used to pay for or reimburse qualified medical expenses;
• The qualified medical expenses paid from the HSA were not paid for or reimbursed from another source; and
• The qualified medical expenses paid from the HSA were not itemized as a medical deduction in any previous year.

You should retain the paperwork verifying you have met these requirements, however, do not file the paperwork along with your federal income tax return.

State Tax Reporting/Record Keeping Requirements. These will vary by state. Review the instructions on your state income tax return, or check with your tax preparer.

Compliance with these reporting and record keeping requirements will help ensure your HSA provides the intended tax benefits.

Word on the street is that health care reform is on the way, but medical costs are still phenomenally high at the moment. Health care spending in the U.S. reached a whopping $2.4 trillion in 2008, according to the National Coalition on Health Care. Unless you and your family members all happen to be incredibly healthy folks, you’ve probably felt the financial impact of ever-rising medical expenses. These days, all it takes is one trip to the emergency room or a visit to a medical specialist — and suddenly your mailbox is flooded with medical bills. Fortunately, there are a few ways you can cut down on your annual health care costs. Here are ten medical bill slashing tips that could save you a boatload of money:

1. Find a primary care physician: In this day and age, many patients simply stop by the local urgent care center when they aren’t feeling well. These centers are fast, convenient and affordable. Although going to a primary physician might seem passé, it’s still important to develop a relationship with a doctor you know and trust. Because a primary care physician takes time to get to know you and your medical history, they are more likely to diagnose you correctly and make well-educated decisions about your overall health — which could save you time and money in the long run.
2. Save on prescriptions: Ask your doctor to prescribe you generic drugs instead of costly brand-name drugs whenever possible. Most health insurance companies charge lower co-pays for generic drugs. You could reduce your prescription costs by $10 to $40 per medication.
3. Avoid the emergency room: Don’t go to the emergency room unless you actually have a medical emergency. Find out if your physician or pediatrician provides after-hours services or ask if they can recommend an urgent care center. This could save you a trip to the hospital and a great deal of money. Figure out which hospitals are in your health care network and keep the address and phone number on hand. Study your plan’s rules about ambulance services and emergency room co-pays. If an emergency does arise and you’re not sure what to do, call the 24-hour emergency help line number located on the back of your insurance card.
4. Cut back on specialist visits: Go to your primary care physician before you make an appointment with a specialist. Your regular doctor might be able to help you with your medical problem without a costly visit to a specialist.
5. Stay healthy: If you quit smoking, keep your weight at a healthy level, exercise regularly, take prescribed medications and get regular check-ups, you’ll save untold amounts money in the long-run on health care expenses. Plus, healthy lifestyle changes can help you keep chronic diseases under control, which means you won’t have to pay as much for costly treatments and prescriptions.
6. Review your meds: Discuss your regular medications with your primary care doctor every so often. Talk about how long you’ve been taking the prescription, whether it’s working or not and what negative side effects it might have. You and your doctor might decide you no longer need the medication.
7. Question expensive testing: If your doctor says you need to get an MRI, a CT scan or another costly test, ask if the test is absolutely necessary. Sometimes these tests lead to nothing more than hefty medical bills.
8. Don’t fall for the drug hype: Every time you turn on the TV there’s a flashy new ad for the latest “miracle” drug. Don’t get caught up in the hype. Although some of these newly released drugs might have a few advantages over their older counterparts, the new meds are often much more expensive. Talk to your primary care physician about whether it’s worth it to make the switch.
9. Don’t go crazy with screening tests: Some screening tests are important because they can catch a disease in the earliest stages. However, you can easily get carried away with screening tests. Oftentimes, these tests lead to false alarms and unnecessary treatments. Try to stick with just the screening tests your doctor recommends based on your medical history.
10. Give it some time: Obviously some medical problems require immediate treatment. For example, if you think you’re suffering from a stroke or heart attack, get medical attention immediately. On the other hand, if you’re just feeling a little under the weather or having minor aches or pains in your joints, you probably shouldn’t rush to the doctor. Give yourself some time and see if your body can handle it without the help of medication. However, if these symptoms persist for a week or longer, you might want to see your doctor.

If you’ve purchased Life insurance to help protect your family in the event of your death, good for you. However, you probably shouldn’t pat yourself on the back just yet. Why not? Because unless you have the appropriate amount of Life insurance, your family isn’t fully covered.

According to a 2008 study by LIMRA International, a whopping one-third of U.S. adults do not have Life insurance. This is certainly a troubling statistic, but there’s another trend that’s perhaps even more disturbing: Countless families who do have Life insurance do not have enough.

Americans have a combined $10 trillion worth of Life insurance coverage, according to a 2008 study by the American Council of Life Insurers. Although this might seem like an astounding amount of insurance, $10 trillion represents only 72% of our nation’s combined annual income, which comes out to a whopping $14 trillion. Although uninsured families are well aware that they have no coverage, most underinsured families don’t realize it until it’s too late.

Even if you have Life insurance, your family could be at serious financial risk if you don’t have the proper amount. If you’re not sure whether you have enough coverage, it’s time to take a second look at your insurance policy.

Pin-pointing the magic number

Figuring out how much Life insurance you need is no easy task. There are a few different ways to calculate the appropriate amount of Life insurance you need. Some insurance experts say you should simply multiply your annual income by three times while others say you need at least eight times your annual salary.

However, many advisors point out that the income multiplication rule of thumb might not be the best the calculation. When it comes down to it, the amount of Life insurance you need depends on your family’s unique situation, including many different factors.

To figure out the right amount, you might want to ask yourself a few important questions, including:

• If I were to die, how much money would my spouse need to continue paying our mortgage?
• Would my spouse be able to work or would he or she need to stay home with the children?
• If my spouse were to work, would he or she need to pay childcare expenses?
• How will my children be able to afford college tuition?
• Will my spouse be able to afford making contributions to a retirement account, ensuring a comfortable retirement?
• How will inflation impact my family’s finances in future years?

Once you answer all of these questions, you’ll be able to make a more informed decision about the amount of Life insurance you need. Of course, you’ll also want to review your coverage each year. If there have been changes in your family (your children are now grown and no longer need financial support) or changes in your overall financial situation (you now have a higher-paying job or a lower mortgage), you’ll want to adjust your Life insurance coverage accordingly.

Purchase the right policy

There are two basic types of Life insurance policies: Term insurance and Cash-Value insurance. Term Life covers you for a specified amount of time, anywhere from one to 30 years. These policies are less expensive because they are designed solely for protection. Many people choose Term insurance because their need for Life insurance will decrease as they get older. Term insurance is also good option for families who want to protect their children until a certain age.

Cash-Value Life insurance covers you for your entire life. These policies act as both an insurance plan and a savings mechanism. Because the insurance company actually invests some of your premium, Permanent Life has the potential to accumulate cash value on a tax-deferred basis.

Eventually, you can borrow money from a Cash-Value Life policy. Because loans are usually not considered income, you probably will not face any income tax liability for these withdrawals. However, whatever you withdraw will be subtracted from the ultimate death benefit.

Calculating how much and what type of Life insurance you need is a complex process that involves a lot of research and thought. Meet with one of our insurance experts, who can help you determine how much insurance you need and what you can realistically afford.

Most people try to hedge their bets when it comes to their finances, and planning for retirement is no exception. The goal is usually to earn the maximum return possible on the money we invest. One way to accomplish this is through a concept known as Pension Maximization. You should explore this strategy with your insurance agent if you plan to use pension income to generate your retirement income, because Pension Maximization could allow you to increase your monthly payments.

When a couple decides to start drawing on their company pension, they generally choose a joint and survivor option, which will provide a monthly income until both spouses die. The amount of your monthly income is based on how long an actuary thinks both of you will live based on your current age. The longer both of you are expected to live, the lower the monthly income.

With Pension Maximization, you can reverse this. Instead of opting for a joint and survivor payment, you take the single life, or straight life, option. Since the insurer is only providing income for the life expectancy of one person, the monthly income will be higher than that provided by the joint and survivor option. You also will receive a higher income because you aren’t receiving a term, or period certain, guarantee with this option.

However, if the covered spouse dies suddenly, monthly payments stop. To compensate for this risk, you can use some of the additional income — the difference between the higher monthly income that the straight life option pays and the lower monthly income of the joint and survivor option — to purchase a Life insurance policy on the covered spouse. So, guaranteed ongoing income for the surviving spouse is provided through the Life insurance policy instead of through the deceased spouse’s pension. Even though the survivor loses the pension income, he or she has the death benefit from the Life insurance policy, which can be used to purchase an income annuity that provides a monthly payment. And it’s likely that the survivor is now much older, so he or she might be able to generate a higher income due to a decreased life expectancy.

So far we’ve only discussed what happens if the person covered by the pension dies first. But what if their spouse dies first? With a traditional joint and survivor option even when one spouse dies the other spouse continues to receive the same monthly check. But with the Pension Maximization strategy, the covered spouse now has the option to either keep the Life insurance policy, perhaps for estate liquidity or charitable purposes, or surrender it and receive any cash value. Plus they’ll have the higher income provided by the single life pension option for the rest of their life.

Keep in mind that this Pension Maximization strategy doesn’t work in every instance especially if the covered spouse is not likely to qualify for Life insurance based on their health history. In any case, before you make an irrevocable decision regarding your pension payments, please give us a call to learn if Pension Maximization is right for you.

Although it is difficult to consider, one day you could lose your ability to earn a living. An accident or injury could occur at any time, and cannot be anticipated. According to statistics presented by the Center for Disease Control’s injury research department, an estimated 5.3 million Americans are currently living with a debilitating disability, and each year about 80,000 more become disabled. The CDC concluded that just over half of all non-minor injuries result in some sort of debilitating disability.

Your Medical insurance does not cover all of the costs that accompany a disability, which comes as a surprise to many people. Even if you are covered by a Group policy, you might only be eligible to receive a small percentage (usually 50%-60% of gross income) of your current income if you cannot work, and benefits could last only a short time.

Social security disability will only be approved if you are severely disabled, and payments will not begin until six months after you have applied. Do not expect savings to cover you during this period; you might exhaust them completely within a few months. This could damage your credit if you fall behind on mortgage, insurance, or bill payments: 46% of all home foreclosures are caused by a disability, according to the U.S. Department of Housing and Urban Development. Sudden loss of income is a devastating, unpredictable experience and it pays to be adequately prepared.

A private Disability Income insurance policy can provide monthly benefits to replace a portion of your income in the event you become disabled. This will prevent you from exhausting your retirement savings, which would leave you without money to support yourself later in life.

Although most people understand the importance of Life insurance, it seems many overlook the value of Disability coverage. It seems we anticipate death more fully than we anticipate becoming disabled. Disability insurance could prevent this unanticipated financial strain, by ensuring that you and your family are able to maintain a comfortable standard of living regardless of whether you are able to work.

By now, most consumers understand the critical importance of Life insurance — especially those who have loved ones depending on their income. Life insurance offers financial protection for your dependents should anything happen to you. Without the right coverage, your family might struggle to pay the bills and make ends meet.

However, there is a common misconception about Life insurance: most people assume that Term Life insurance is much more affordable than Whole Life insurance. Although this might be the case for those who are young and healthy, Term insurance can become exorbitantly expensive for older individuals who might no longer be the picture of health.

Term vs. Whole

As you probably know, Term Life insurance covers you for a specific amount of time — anywhere from one to 30 years. These policies are less expensive because they are designed solely for protection. Many people choose Term insurance because they figure the need for Life insurance will decrease as they get older. Term insurance is also a useful option for those who want to protect their children until they are able to support themselves.

On the other hand, Whole Life insurance is permanent — it offers protection for your entire life. This insurance is ideal for individuals who still have someone depending on their income, whether it’s a spouse, grandchild or a special needs son or daughter. It’s also a good option for individuals who want to ensure there’s enough money to pay off their debts or provide a tax-advantaged inheritance for their heirs after they die.

Making the switch

Let’s say you fall into that second category — you think you might have a need for Life insurance protection for the rest of your life. However, your Term policy is about to expire. What should you do?

You might consider renewing your current Term policy. However, your premiums will most likely skyrocket now that you’re older. Alternatively, you could convert your Term policy to Whole Life. This will ensure that you are covered for the rest of your lifetime — which means your dependents will be protected when you die, whether that happens one or 20 years from now.

Whole-some benefits

One advantage to Whole Life insurance is that the premiums generally remain constant over one’s lifetime.

Another benefit to Whole Life is that you can borrow from the accumulated cash value of your policy. However, it’s important to realize that like any loan, interest will accrue on the money you borrow from your policy. If you do not pay back the loan during your lifetime, this amount will be deducted from the death benefit before it’s paid out to your heirs.

The loan feature is particularly beneficial to older policyholders who have built up a significant cash value. After all, as we grow older, we often run into some financial “surprises” — from medical emergencies to dwindling retirement income. The cash value from a Whole Life policy could help you deal with these unexpected events. For example, you could borrow from your Whole Life policy’s cash value to supplement your income, pay off your mortgage or fund long-term care expenses. You could even use the money to help pay for a grandchild’s college education.

Are you a good candidate?

As with any type of insurance, whether or not you qualify for Whole Life and the price you’ll pay depends on your age, health and the specific type and amount of insurance you plan to purchase. Meet with our financial professionals to determine whether or not Whole Life insurance is right for you. An expert can assess your unique situation and find the best policy to meet your needs.

A disability often occurs when you least expect it. If it happens to you, you could find yourself in a shaky financial position without Disability insurance coverage according to a new study.

Market researcher Opinauri, Inc., conducted an online survey on behalf of The Hartford that questioned 971 U.S. adults, aged 18-64, during February 2008. The majority of the participants were married with children, working full time, and earning between $50,000 and $100,000 annually.

Seventy percent of those who responded to the survey said that they were meeting their expenses with little or nothing left over after paying bills. Eight percent said they were unable to meet current household expenses. But a staggering 95% admitted that they would need to alter their lifestyle if they lost part of their family’s income for three to six months. However, despite this admission, only half of those polled said they had Short- or Long-Term Disability insurance to cover their needs should the unexpected happen.

It’s easy to conclude from the survey data that many Americans are trying to make ends meet while juggling significant debt. Walking this kind of tightrope makes them extremely vulnerable if a disability strikes.

Even more disconcerting is that many Americans are facing this risk without any form of income protection because they don’t believe they need it. One in four survey participants said they are more likely to win a lottery than suffer from an injury or illness for three to six months. However, the Social Security Administration paints an entirely different picture. The agency says U.S. workers have a one-in-three chance of becoming disabled at some time during their working life.

Given how real the possibility is that you could experience a disability, it makes sense to investigate your insurance options. The Life and Health Insurance Foundation for Education (LIFE) says that about half of all mid-sized and large employers provide some type of Long-Term Disability Income insurance. Even if you are fortunate enough to work for a company that offers Group Disability coverage, the plan likely only pays 50%-60% of your current income in the event of a disability. If you’re like most Americans, a 50%-60% income replacement is not going to suffice, so you should explore a supplement to your group policy.

Here are some items to consider if you need to find a private policy to supplement the Long-Term Disability coverage provided by your employer:

• How does the policy define “disability?” Are you considered disabled if you can’t perform your specific job, or if you can’t perform any job, for which you are qualified by training, experience and education?
• When do payments begin? Is the waiting period pre-determined, or can you choose the length of time you wait before benefits begin? The longer you can wait for payments to start, the lower your premiums.
• To what extent must you be disabled before benefits begin? Must you be totally disabled, or can you receive benefits for a limited time if you are partially disabled? In order to receive benefits for a partial disability, must it follow a period of total disability for the same cause?
• Can you receive residual benefits? If you resume work on a modified schedule because of your disability, does the policy pay you residual benefits to make up the difference in your income?
• How long will you receive benefits? You can receive benefits for two years, five years, ten years, or until you turn 65. The longer the benefit period, the higher your premiums.
• Does the policy have a “waiver of premium” provision? Policies containing this provision permit the insured to stop paying premiums if they are disabled for 90 days or more.