(AKA Disability Insurance)
What would happen if you suddenly became injured or diagnosed with an acute or permanent illness that prevented you from working for 1, 2, 3 years or even the rest of your life? Could you afford to pay the mortgage, car payment, light bill, food, kid’s education?
I know we don’t want to hear numbers and stats, but in this case it’s a must. If you’re 35 and your disability lasts longer than 90 days, there’s a good chance you could remain without an income for an average of close to 3 years! Most of us can’t go the 90 days without an income let alone 3 years.
I see all kinds of new professional graduates in my office, mainly healthcare professionals. Most show up with a new vehicle, looking for a new home and looking to invest some money. Unfortunately, very few ask about disability insurance. It’s not their fault, it’s just that we haven’t been educated enough on this topic. That’s why it’s so important to help educate clients on how things like disability insurance can save their financial well-being.
As advisors, we’ll have a great conversation about their current situation, goals, dreams and ambitions. We then turn to them and simply say, “What happens to all of this if you become disabled?” Some smile and look a little confused. Others ask, “What do you mean?” The simple response is, “Who’s going to pay for all of this when your EI or sick leave runs out?” What if you’re self-employed and do not qualify for EI? Go fund me accounts, bake sales, auctions are great community support tools, but unfortunately, they won’t sustain a family for 5, 10, 15 perhaps up to 30 years’ worth of lost income.
In 2015, I attended a seminar about disability insurance, and I heard an idea that has stuck with me throughout my career as an independent financial advisor. It went something like this…
“If you had the legal and financial means to own a legal tender printing machine in your home – a machine that could print money when you needed it – would you pay for insurance on it in so it could be replaced if it became damaged?” Of course, we would.
The presenter then said, “YOU ARE THAT MACHINE!” Your paycheque provides you with income that week after week, year after year! So why not insure yourself!
He went on to say… We purchase insurance on our homes, on our cars and RVs, and for our vacations, however we usually ignore the most important asset we have…OURSELVES! So why not insure yourself?!
This stuck with me for a long time and continues to this day. It’s the reason I lead every meeting with a discussion on disability insurance and the ability to replace our income in the event of injury or illness.
Let’s get the conversation started.