Safety Net – Forbes

Insurance that works when you can’t.

After earning a PH.D. in Sociology, Danny Bazil Riley started to work as the general manager at a commercial real estate firm at an annual base salary of $70,000. Soon after, a financial planner stopped by his desk to drop off brochures about insurance benefits available through his employer. But, at 32, “buying insurance was the furthest thing from my mind,” says Riley.

Yet one thing caught Riley’s eye: a pamphlet describing a kind of insurance that provided income replacement in the event of a disability. The annual premium for Riley’s income and occupation was $1,800. “I knew what my debt ratio was and how devastating it would be if I lost my source of income,” says Riley. “While never in a million years did I think I would ever really need it, buying the insurance seemed the smart thing to do.”

Three years later Riley was diagnosed with an organic brain disease. Easily confused and unable to concentrate for long stretches, he was forced to quit his job. “Life, as I knew it, had come unraveled,” says Riley.

After a predetermined waiting period, the policy he had bought–underwritten by Principal Life–began paying Riley a monthly benefit of $3,725. Since he had paid the premiums with aftertax dollars, the benefit was entirely tax free. “Without this, I would have been in Chapter 13, dead or living in a shack,” says Riley. “It literally saved my life.”

Unlike Riley, few people plan for the possibility that they might one day become disabled and unable to work. “People naturally think they should insure their home and car, yet they are more likely to suffer a disability than lose their home in a fire or die prematurely,” says Deanna Strable, vice president of Specialty Benefits at Principal.

One in three American adults will become disabled before age 65 for 90 days or more. One in seven will be disabled for five years or more. A Rand Health study published in January found that the number of people aged 30 to 49 who are disabled increased by more than 50% between 1984 and 2000 (largely because of the increased prevalence of obesity). During the course of a person’s career he or she is 3.5 times more likely to be injured and need disability insurance than to die and need life insurance.

Read more, including some interesting stats “By the Numbers, What Are the Odds?” via the original Source: Safety Net – Forbes

Posted in Disability Insurance.

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