Let me ask you a simple question: What is your most valuable asset?
Is it your house? Your car? Your 401(k)?
No. It is your ability to earn an income. If you are 35 years old and earn $100,000 a year, your future earning potential is over $3 Million. Yet, you insure your $30,000 car, but leave your $3 Million asset completely unprotected.
If you get into a car accident or get diagnosed with cancer and can't work for 3 years, how will you pay your mortgage? Today, we discuss Long-Term Disability (LTD) Insurance—the only safety net that keeps your paycheck coming when you can't work.
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| 'Long-Term Disability Insurance' |
1. The "Social Security" Myth
Many Americans think, "If I get disabled, the government will pay me."
Do not count on it. Social Security Disability Insurance (SSDI) is notoriously difficult to qualify for. In 2025, the approval rate was roughly 35%, and the average monthly benefit is barely enough to cover rent (approx. $1,500). It is a poverty-level safety net, not a lifestyle protector.
2. Short-Term vs. Long-Term: What Do You Need?
There are two main types of coverage. Knowing the difference saves you money.
🗓️ Short-Term Disability (STD)
- Duration: Pays out for 3 to 6 months.
- Verdict: Usually NOT necessary if you have an Emergency Fund. Why pay premiums for something your savings can cover?
📅 Long-Term Disability (LTD)
- Duration: Pays out for 2 years, 5 years, or until Retirement Age (65/67).
- Verdict: Mandatory. This protects you from catastrophic financial ruin if you are out of work for a decade.
3. The Most Important Clause: "Own-Occupation"
This is where insurance companies try to trick you. When buying a policy, you must check the Definition of Disability.
- ❌ Any-Occupation (The Trap): The insurer will only pay if you cannot do any job. If you are a surgeon who loses a hand, they won't pay because you can still flip burgers at McDonald's. Avoid this.
- ✅ Own-Occupation (The Gold Standard): The insurer pays if you cannot do your specific job. If you are a surgeon and can't operate, they pay you full benefits, even if you go work as a professor or consultant.
4. How Much Does It Cost?
Generally, a good Long-Term Disability policy costs between 1% to 3% of your annual salary.
If you earn $100,000, expect to pay roughly $100-$200 per month. Is it cheap? No. But considering it secures a $60,000/year (tax-free) paycheck if you get sick, it is the best ROI in the insurance world.
Pro Tip: To lower costs, increase your "Elimination Period" (Waiting Period) from 30 days to 90 days. This can drop your premium by 20-30%.
Conclusion: The Forgotten Insurance
According to the Social Security Administration, 1 in 4 of today's 20-year-olds will become disabled before reaching age 67.
The risk is real. Don't leave your family's lifestyle to chance. Secure your income stream today so you can sleep soundly tonight.
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