Paycheck Protection.
May 16, 2016 by
Valerie King: Disability Insurance Saves a Family—Twice.
February 17, 2016 by
4 Financial Tips to Keep Your Family Safe.
February 10, 2016 by
It’s tough to get our financial house in order, not because it’s especially hard, but because it’s … boring? Tedious? The last thing we want to spend time on? To remedy that, here are four tips that you can take on and accomplish:
1. Make sure you have life insurance—or enough of it. Do you really need life insurance? Well, answer this question to find out: Would your loved ones suffer financial if something happened to you? If the answer is yes, you need life insurance. Then comes the question, how much? There are a number of factors that go into calculating how much life insurance you might need. But it doesn’t have to be difficult. Instead, use this online Life Insurance Needs Calculator, and in just a couple of minutes you can have a working idea of the amount you need. If you already have life insurance, why not use this calculator to make sure you have enough!
And don’t let cost—or actually perceived cost—stop you from getting coverage. Did you know that 80% of people overestimate how much life insurance costs? And those under 25 think it’s four times more expensive than it actually is. Let’s frame it this way, say you’re 30 and in good health, a 20-year level term life insurance policy with $250,000 of coverage may cost around $13 a month. That’s the equivalent of a few Starbucks drive-through lattes. Here are a number of ways you can get coverage or search for an agent if you don’t have one.
Would you like to your ex-spouse to get your life insurance if something were to happen to you because you forgot to change the beneficiary on your policy?
2. Review your life insurance beneficiaries. Would you like your ex-spouse to get your life insurance if something were to happen to you because you forgot to change the beneficiary on your policy? Would you like the money to get tied up in court because you named your minor children as the beneficiaries? These are missteps that happen more than you think. Add to that the fact that people may have more than one policy—for example one through the workplace (a group policy) and one that they bought individually.
This is exactly the type of thing that a life insurance agent or advisor can help you with. And it won’t cost you anything to talk to them about it. Plus, if you’ve gone through tip #1, they can double check that the amount of coverage you came up with meets you needs. Also, it’s honestly a lot less hassle to have someone who knows what they’re doing help you out, and isn’t that what we’re trying to achieve here—get it done?
3. Don’t skip disability insurance. Many people aren’t really familiar with what disability insurance is and what it does. Basically, it replaces a portion of your income if you’re unable to work due to a disabling illness or injury. Why is that important? Think about how long you could make ends meet—pay rent or the mortgage and all your monthly bills if your paycheck suddenly disappeared. A Life Happens survey found that a majority of those who work wouldn’t make it more than a month before they’d have to make some serious financial sacrifices. Again, an online calculator can help; get started with this Disability Insurance Needs Calculator.
So, how do you get it? Your employer may offer disability insurance coverage through a group plan. If you’re not sure, contact your HR department or benefits manager to find out what kind of coverage you have (if any). If you don’t have coverage or need more than is offered through work, buying your own disability insurance policy is worth considering. Unlike group coverage, privately owned insurance stays with you even when you change jobs.
Also keep in mind that most people overestimate what the government will pay or cover if something were to happen. According to the National Safety Council, 73% of long-term disabilities are a result of an injury or illness that is not work-related and therefore wouldn’t qualify for Workers’ Compensation. And if you were hoping for Social Security disability benefits, know that about 45% of those who apply are initially denied, and those who are approved receive an average monthly benefit of around $1,100, which would leave you living at about the poverty level.
4. Automate your emergency fund. While not as fundamentally critical as the above tips, this will probably have the most impact on your day-to-day life. Everyone one of us runs into unexpected events that are costly—a major car repair, a leak in the roof, a job loss … the list, as you know, can seem endless. To give yourself peace of mind and bit of cushion, set aside a certain amount each month—it could be $50 or $500, depending on your financial situation—and have it automatically deposited into your savings account. If it’s easier to track, you could even keep it in a separate account. Then it becomes a no-brainer, because that money isn’t there for you to spend. In a year, if you chose one of the above amounts, you could have $600 or $6,000 stashed away!
These tips will set you on the path of ensuring that if the unforeseen happens, you and your family will be OK financially. And what’s worth more than your peace of mind?
Why Americans Lack Disability Coverage but Need It.
February 10, 2016 by
Why Americans Lack Disability Coverage but Need It.
Nearly 30 percent of working American adults believe they are more likely to be targeted by the IRS for an audit than they are to experience an injury or illness resulting in loss of work. In reality, they have about a one percent chance of being audited, but they face about a 25 percent chance of losing work because of an illness or injury. Although the majority of adults consider their income as one of the most important things in their lives, a recent report from the Council for Disability Awareness showed that there are several factors preventing working adults from obtaining insurance to protect it.
Regardless of a person’s age, his or her ability to draw an income is the most valuable resource possessed. However, the report showed that more than 55 percent of adults said they did not have disability insurance. This is an important insurance product for every working American to have, and it protects against the loss of income if the policyholder is unable to work for months or years following an injury or illness. When asked why they did not have this vital form of coverage, nearly 35 percent of adults said they could not afford it. Another 30 percent said they had never considered it, and nearly 25 percent said they did not know enough about it.
While people cited being unable to afford coverage as a reason not to have it, they should actually see it as something they cannot afford to go without. On average, a long-term disability lasts more than two years. This leaves helpless workers to try to find ways to compensate for lost income and pay living expenses. Government disability benefits alone will not even come close to replacing prior income. More than 40 percent of respondents said they would purchase disability coverage if it were cheaper, but about 60 percent said they had less than six months of income saved.
About 25 percent of today’s adults who are 20 years old will face a disability before they reach retirement age. Adults underestimate the risk they face of losing their ability to work. Although accidents are what most people think cause disabilities, the main causes are actually depression, back pain and absence requests for cancer treatment. About 50 percent of respondents said they would have to drain their savings if they faced a disability. Younger respondents said they would ask family or friends for loans, but older respondents said they would seek government programs. However, both solutions are only temporary and would not suffice for a long period of time.
It is important to consider how the bills would be paid in the event of a disability lasting more than three months, and people should consider how long they would be able to cover their expenses. Couples should also consider whether they could survive on one partner’s paycheck if the other became ill or was injured. Anyone who cannot answer these questions quickly with a viable solution should seek professional advice.
People who have disability insurance options offered by an employer may find more affordable solutions in their benefits package than they would by searching independently. There are more types of coverage than just disability alone in the marketplace, so all options are worth considering. Some companies may offer more than others, but employees who do not have access to this type of coverage at work should still seek it independently. To learn what options are available, discuss concerns with an agent.
Why Americans Lack Disability Coverage but Need It.
September 9, 2015 by
Why Americans Lack Disability Coverage but Need It.
Nearly 30 percent of working American adults believe they are more likely to be targeted by the IRS for an audit than they are to experience an injury or illness resulting in loss of work. In reality, they have about a one percent chance of being audited, but they face about a 25 percent chance of losing work because of an illness or injury. Although the majority of adults consider their income as one of the most important things in their lives, a recent report from the Council for Disability Awareness showed that there are several factors preventing working adults from obtaining insurance to protect it.Regardless of a person’s age, his or her ability to draw an income is the most valuable resource possessed. However, the report showed that more than 55 percent of adults said they did not have disability insurance. This is an important insurance product for every working American to have, and it protects against the loss of income if the policyholder is unable to work for months or years following an injury or illness. When asked why they did not have this vital form of coverage, nearly 35 percent of adults said they could not afford it. Another 30 percent said they had never considered it, and nearly 25 percent said they did not know enough about it.
While people cited being unable to afford coverage as a reason not to have it, they should actually see it as something they cannot afford to go without. On average, a long-term disability lasts more than two years. This leaves helpless workers to try to find ways to compensate for lost income and pay living expenses. Government disability benefits alone will not even come close to replacing prior income. More than 40 percent of respondents said they would purchase disability coverage if it were cheaper, but about 60 percent said they had less than six months of income saved.
About 25 percent of today’s adults who are 20 years old will face a disability before they reach retirement age. Adults underestimate the risk they face of losing their ability to work. Although accidents are what most people think cause disabilities, the main causes are actually depression, back pain and absence requests for cancer treatment. About 50 percent of respondents said they would have to drain their savings if they faced a disability. Younger respondents said they would ask family or friends for loans, but older respondents said they would seek government programs. However, both solutions are only temporary and would not suffice for a long period of time.
It is important to consider how the bills would be paid in the event of a disability lasting more than three months, and people should consider how long they would be able to cover their expenses. Couples should also consider whether they could survive on one partner’s paycheck if the other became ill or was injured. Anyone who cannot answer these questions quickly with a viable solution should seek professional advice.
People who have disability insurance options offered by an employer may find more affordable solutions in their benefits package than they would by searching independently. There are more types of coverage than just disability alone in the marketplace, so all options are worth considering. Some companies may offer more than others, but employees who do not have access to this type of coverage at work should still seek it independently. To learn what options are available, discuss concerns with an agent.
SSDI: Still on track to go broke in late 2016.
July 27, 2015 by
Managers of the fund that supports the Social Security Disability Insurance (SSDI) program say it’s still on track to run dry in “late 2016” — around election time.
The trustees of the SSDI trust fund and the main Medicare Part A hospitalization trust fund talk about the funds’ finances in new annual reports.
The SSDI program should take in enough revenue to cover about 81 percent of claims if Congress makes no changes, the trustees say. SSDI’s reserves now amount to less than 40 percent of the program’s annual costs, the trustees say.
The actual results could be worse than the projections, because the trustees assume that real, inflation-adjusted interest rates on fund assets will be about 2.4 percent to 3.4 percent. The average inflation-adjusted rate for the 10-year period ending 2012 was just 1.33 percent.
The actual real interest rate on fund assets was negative 0.75 percent in 2011 and positive 0.32 percent in 2012, the trustees say.
“These swings partly reflect volatility in energy prices,” the trustees say.
The trustees of the main Medicare hospitalization fund say that fund will be empty in 2030. The trustees gave the same Medicare fund depletion date a year ago.
If Medicare Part A costs are high, the fund could be empty as soon as 2022, the trustees say.
When the Medicare Part A trust fund runs out, the program could collect enough tax revenue to pay about 86 percent of its claims.
The Medicare Part B physician services and Medicare Part D drug programs rely on premiums for a given year to pay the claims incurred during that year and do not use the kinds of large trust fund programs that the SSDI and Medicare Part A programs use.
Over a 75-year period, the Medicare Part A fund’s actuarial deficit should amount to about 0.68 percent of taxable payroll, down from a projection of 0.87 percent of taxable payroll given a year ago. The fund looks better partly because it seems as if health care costs could grow more slowly than expected, the trustees say.
But the real gap likely will be bigger than projected, because Congress requires the trustees to assume that Medicare will be able to hold down provider reimbursement costs, but Congress has not demonstrated much ability to let laws that could hold down Medicare provider reimbursement costs take effect, the trustees say.
Disability Insurance: The Overlooked Employee Benefit.
June 8, 2015 by
Disability Insurance: The Overlooked Employee Benefit
Does your pay stub include the cryptic three-letter code LTD with a tiny dollar amount that’s deducted each pay period? It stands for long-term disability insurance, and it pays to have it to provide for your family when you can’t work because of an injury or an illness like cancer. But many employees go without it. In fact, despite the fact that more employers are offering long-term disability insurance as an employee benefit, the number of employees insured is dropping.
That’s the troubling trend that the Council For Disability Awareness, a group representing 19 member insurance companies, found in its latest annual review of claims data for 2013. More than 213,000 employers offer long-term disability insurance through those companies, a slight increase for the second year in a row, after declines from 2009 to 2011. Yet the number of insured employees declined roughly 1.5% to 32.1 million last year (in 2009, 34 million employees had coverage).
There are a couple of reasons for the changing disability landscape, according to Barry Lundquist, president of the Council. One factor is that employers are focused on compliance with the new Affordable Care Act’s health insurance provisions—so employers and agents/brokers are saying they’ll deal with other benefits like disability insurance later.
Another factor is that when employers are adding disability insurance as a benefit today, it’s more likely that they add it as a voluntary benefit. That means the employee pays the full cost. Historically, the employer has paid the full cost, or at least for coverage up to a certain level. With employer-paid plans, employees are automatically enrolled. Sometimes you have the decision whether to make salary deferrals to increase your coverage. But with voluntary plans, enrollment hovers around 40%, Lundquist says.
Disability Insurance: Protecting Your Income
March 11, 2013 by
In 2004, thereIn 2004, there were more than 32 million disabled adults, according to the U.S. Census Bureau. That’s about 10% of the U.S. population. Thus, you have a 1:3 chance of becoming unable to work due to a prolonged illness or injury. The financial impact for individuals who become disabled and do not have disability insurance can be devastating. Moreover, with the current economic conditions most of us don’t have enough savings and investments to rely on should we be unable to work as a result of an illness or injury. However, by obtaining private disability insurance you can reduce the financial impact by up to 80%. When combined with government disability insurance programs you can cover up to 95% of the expenses.
When you have insurance that pays most of the expenses you eliminate not only the financial burden, but also the emotional hardship which allows you to focus on your rehabilitation. Without private disability insurance you may need to sell your home, car and other assets. In fact, people that are suddenly faced with a disability and loss of income have lost their homes to foreclosure. When you think of all of the costs associated with not being able to work, acquiring disability insurance to protect your income seems to be a very prudent and inexpensive thing to do. When you sit down and think about your monetary resources, you have to consider what-if scenarios. Nobody likes to think about these types of things, but you have to understand that they don’t always happen to somebody else. When you plan for the worse-case scenario you are better off if something unexpected happens. If it doesn’t happen you are able to enjoy peace of mind knowing that if something did happen you were fully protected.