When someone mentions the word insurance, most of us think of one of three things:
- Aaron Rodgers doing a discount double check
- The GEICO Gecko using his British accent
- The coverage we carry on our cars, our home, our health, or our life
What most of us don’t think of is our long term disability coverage.
Since tangible assets like our cars and homes are easy to visualize, they’re often top of mind when it comes to insurance protection.
But what about the risk that we get sick or injured, and can’t work?
Long term disability insurance is meant to replace our income if this happens. And coincidentally, our ability to earn a living is probably our biggest and most overlooked asset.
Let’s take a moment to think about your ability to earn a living. Just imagine for a moment what your lifetime earnings will look like.
Your lifetime earnings includes every single paycheck you earn throughout your entire career. It counts every single raise, every single promotion, and every single bonus.
When you add them all together you’ll get a massive number. It will be far bigger than the value of your home, your car, and probably your retirement nest egg.
Your ability to go out into the work force and earn this money is your earnings capacity.
Now Imagine It’s Gone
Many people consider the possibility that they die, and the impact that would have on their family. But what if you were hurt or sick and unable to work?
Your family would be left with monthly expenses like a mortgage, utilities, and grocery bills. They’d also be left without your steady paychecks to afford them.
Plus there’s a chance you might need additional help from a caretaker if you’re permanently disabled. The end result? Higher expenses, lower income.
It’s More Likely Than You Think
If you’re thinking “that’ll never happen to me,” the statistics would disagree with you.
The social security administration says that 1 in 4 of today’s 20 year-old’s will become disabled for some period of time before they retire.
And if you’re under 45, the chances that you become disabled are far, far greater than the chances that you die.
Let’s Think About This
- Our earnings capacity is our biggest and most important asset
- Becoming disabled is far more likely than we realize
- Losing our earnings capacity could cause our family severe hardship