Understanding the Overlooked Risk of Long-Term Disability in Financial Planning
A Deep Dive into Long-Term Disability and Its Impact on Your Financial Future
Hello everyone, I'm TJ Van Gerven, your host for the podcast "Do More With Your Money". In one of our recent episodes, we delved into a topic that is often overlooked in financial planning - the risk of long-term disability, especially for those in the early stages of their careers. Today, I want to share some of the key insights from that discussion in a more detailed format.
What is Long-Term Disability?
Long-term disability is a condition that can prevent you from performing your regular work duties for an extended period. It's a risk that many of us tend to overlook, but it's crucial to understand its implications on our financial health.
The Importance of Having Coverage
Having long-term disability coverage is essential. It provides a safety net, ensuring that you have a source of income if you're unable to work due to a disability. However, it's not just about having coverage; it's about understanding the specifics of your coverage and considering whether it's adequate for your needs.
Employer-Sponsored Coverage: What You Need to Know
Many employers offer long-term disability coverage as part of their benefits package. While this is a great starting point, it's important to understand the details of your employer-sponsored plan. For instance, you should be aware of the waiting period before the benefits kick in and the percentage of your income that will be covered.
Own Occupation vs. Any Occupation Coverage
Another crucial aspect to consider is the difference between "own occupation" and "any occupation" coverage. Own occupation coverage pays benefits if you're unable to perform the duties of your specific job, while any occupation coverage only pays if you're unable to work in any job reasonably suited to your education and experience.
The Limitations of Employer Plans
While employer-sponsored plans are beneficial, they may have potential limitations. It's essential to understand your specific situation and expenses and consider whether supplemental coverage is necessary to ensure adequate protection.
The Role of a Financial Planner
A financial planner can provide objective advice on long-term disability coverage. They can help you understand your coverage, identify any gaps, and explore options for supplemental coverage.
Call to Action
I encourage you all to review your coverage, request your full policy from your employer, and explore portable coverage options. Understanding and managing the risk of long-term disability is a crucial aspect of financial planning.
In conclusion, long-term disability is an overlooked risk that can have significant implications on your financial health. It's not just about having coverage; it's about understanding your coverage and ensuring it's adequate for your needs. So, take the time to review your coverage, understand the specifics, and consider whether supplemental coverage is necessary. Your future self will thank you.
