The Critical Insurance Most People Don’t Realize They’re Missing
Nov 13, 2024
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Katie Song, a fee-only CFP, shares her expertise on the critical need for disability insurance, especially for high earners. She recounts Lacy's shocking experience with sudden hearing loss, illustrating how insurance can be a lifesaver in unexpected crises. The discussion emphasizes the importance of understanding policy nuances like the 'own occupation' clause, while also addressing the inadequacies of employer-sponsored insurance. Katie urges listeners to secure adequate coverage, demystifying complex insurance decisions to safeguard their financial futures.
Investing in long-term disability insurance is essential to protect high earners from potential income loss due to unexpected health issues.
Navigating insurance claims can be challenging, making it beneficial to utilize a disability specialist attorney for support during the process.
Selecting a long-term disability policy with key features like 'own occupation' clauses and COLA is crucial for adequate financial protection.
Deep dives
The Importance of Long-Term Disability Insurance
Investing in long-term disability insurance is crucial, especially for high earners who are not yet wealthy but have a substantial income. One in four individuals in their twenties will experience a disability before reaching retirement age, making it essential to safeguard one's ability to earn. Lacey's personal experience highlights the significance of long-term disability coverage; despite earning a million dollars annually, her sudden hearing loss threatened her career and financial stability. Having purchased a private long-term disability policy years prior provided her with the necessary financial safety net when she could no longer perform her high-stakes job.
Navigating the Claims Process
Dealing with insurance claims can be overwhelming, particularly when navigating the complexities of disability coverage. Lacey's experience illustrates this, as she faced challenges not only from her employer's insurance policy but also from the long-term disability policy she had purchased privately. After her claim was initially denied, she had to appeal the decision, which added stress to an already difficult situation. To mitigate her stress, Lacey utilized a disability specialist attorney, who helped streamline the process and ensure that her claim was organized and well-presented.
Choosing the Right Insurance Policy Features
When selecting a long-term disability insurance policy, specific features play a critical role in providing adequate coverage. Lacey emphasized the importance of having an 'own occupation' clause, which ensures that benefits are paid as long as one cannot perform their specific job, rather than any job. Additionally, features like cost-of-living adjustments (COLA) help keep benefit payments in line with inflation, and the ability to increase coverage as income grows can safeguard one's financial future. Lacey's policy included these essential features, which contributed greatly to her financial security during her disability.
Navigating Workplace Insurance Benefits
While workplace insurance policies can provide a safety net, they often have limitations that may necessitate additional coverage. Lacey discovered that her employer-sponsored long-term disability insurance did not adequately cover her income, prompting her to seek additional protection. High-income earners, in particular, may find that their employer's offerings are not sufficient to meet their financial needs in the event of a disability. It’s vital to assess both employer-sponsored and private insurance plans to ensure adequate protection against potential financial losses due to unforeseen circumstances.
Emphasizing Financial Preparedness
Lacey's story serves as a powerful reminder of the importance of financial preparedness in the face of unexpected health issues. Her early decision to invest in long-term disability insurance not only preserved her income but also provided peace of mind during a tumultuous time. Recognizing the potential effects of a disability on one's financial situation is crucial, especially given the rising health care costs and the unique risks that high earners may face. Ultimately, prioritizing long-term financial planning, including insurance coverage, can make a significant impact on one’s ability to navigate life's uncertainties.
At her career’s height, Lacy was earning more than a million dollars per year (!) as an executive at a major bank. Then, one early morning, Lacy woke up and realized she was unable to hear anything in her left ear, experiencing something called sudden sensorineural hearing loss. She feared the worst: Her career, as she knew it, was over.
Fortunately, Lacy had purchased a valuable insurance policy a decade earlier. And you don’t have to be pulling down seven figures like Lacy to benefit in the same way.
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