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  The loss of income due to a disability can be devastating to a family. Without the ability to pay day-to-day expenses such as mortgages, car loans, credit cards, etc.; savings and even retirement accounts can be quickly depleted. A well-planned disability income policy can not only help protect you against income loss due to an injury or sickness, but it can provide you peace of mind.




Most Disability Income policies provide income replacement in the event of a covered illness or injury. Disability policies come in a variety of packages covering many different options. The following is an outline of what makes up a disability policy.


The Benefit: The amount of income replacement benefit, the policy will pay out in the event of a disability.


The Benefit Period: The amount of time a benefit payment will be paid by the insurance company to the recipient. Typical benefit periods include a 2-year, 5 year, to age 65 benefit periods.


Elimination Period: The amount of time after an injury or sickness before claims can be received by the insured. Elimination period can vary from 30 days, 60 days, 90 days, or 180 days.


Occupational Class: Insurance companies rate occupations depending on the probability that a sickness or injury will occur. A high-risk occupation such as a truck driver is more expensive to insure than a low risk occupation such as an office manager. Depending on your occupational class, the insurance company will determine an occupational rating.


Supplemental Benefits: Many insurance companies offer extra benefits that can be added to a policy for an extra fee. These benefits can include cash riders, special occupational riders, etc.






Customizing a disability income protection policy is very easy. Many insurance companies that offer disability income plans offer flexibility in all the above items.

  1. Choose the benefit that is right for you: Total all of your monthly expenses and subtract them from any income sources that you would have regardless of your ability to work.

  2. How long can you afford to be without an income: The elimination period is one of the most important choices in your disability income policy. If you have adequate savings, you might be able to sustain a longer period of time without an income. If you can not go a long period of time without an income, you should consider a short elimination period.

  3. How long will you need benefits for: A two year benefit period is typically the least amount of time a disability policy will pay benefits for. The longer the benefit period you choose the more financial cushion you will have in the event of a disability.




What can you afford?

The ability to customize a disability plan gives you a lot of flexibility in the premiums you will pay for your disability policy. Do not over load yourself with a disability policy that has too many benefits, which you will be tempted to drop later because of the expense. Instead, customize a plan that is affordable and sensible to your financial needs. You can always make adjustments later.


Read the fine print and Ask questions!

Every insurance company has a different definition of a disability. With some policies you must be disabled from performing all income producing duties. Other policies define disability as the inability to perform the job in which you are trained. It is important to understand your policy definition of disability. If you have questions, don’t be afraid to ask.



Use the following Quick Calculation Guide to determine

how much disability income protection you need:

Current Monthly Income Needs

Monthly Mortgage/Rent           $__________

Monthly Auto Payments           $__________

Monthly Cost of Living             $__________

Other Needs                            $__________


Total Monthly Needs                                  $__________



Other Income Sources

Spousal/Other Income              $__________

Supplemental Monthly Income  $__________

(Savings, Investments, etc.)

Social Security Benefits             $__________


Total Other Income                                    $__________



Monthly Disability Protection Needs       $__________

(Total monthly needs minus total

 other income)