What Happens When You Can't Work?

We can presume that most of us enjoy earning a living, getting a paycheck (nowadays direct deposit is the norm) and having some discretionary, or "leftover" money to use after paying our bills. Those funds are what we use for the fun stuff, like eating a meal at a restaurant or seeing a movie or treating a friend to lunch. 

But what happens when those funds are no longer available? What if you aren't able to work due to sickness or injury? 

For many people (like me) who are small business owners, independent contractors or otherwise self-employed, a serious disability could not only be devastating to a family's finances, but could also damage the business providing the income. But there's a solution!

A Disability Income (DI) insurance policy can help you protect your paycheck, which in turn helps you pay your bills and maybe even have a little leftover for a movie. DI can help you and your business stay afloat when you are unable to work. 

There are a few things to consider when looking at DI. 

• Underwriting looks at your health, your income and the type of work you do. An office worker may have lower rates than a welder because welding is more dangerous. Some insurance companies will require to see your taxes for the last 2 years.
• Policies can also be purchased that are solely for keeping the business open. 
• Individual DI policies may not have all the benefits found in group plans, like maternity coverage. However, there are many more options that can be structured to work for your needs.

Premiums may not be as high as you think, and your coverage can be customized to fit your budget. Given that over 85% of claims are actually for illnesses, like cancer or strokes, that doesn't mean accidents can't happen. Either way, if you can't work, a DI plan will be a great way to avoid guilting your friends and family into contributing to your GoFundMe plan. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Are You Buying Insurance Or Peace Of Mind?

As I have mentioned previously, the Greek word for insurance is "asfalia", which literally translates to "security". The Greeks are not paying for someone to insure them, but instead are buying peace of mind, knowing that their families and loved ones are secure.

One of the recurring themes that insurance companies use when advertising, or even training their agents, is that their products give people the peace of mind. I worked with one company that had a brochure titled "What Keeps You Up At Night?", with the idea being that prospective clients would be so worried about what would happen to their families that they couldn't get to sleep. One can imagine that this may be the case for some people. 

If only there was a way to get to these people when they were worrying about this. How could I help people who were in their pajamas? 

That's why we have added several quoting tools onto our website. A concerned breadwinner can visit our site and run quotes for life, cancer, accident, and hospital indemnity insurance. We even have one for our combo dental, vision and hearing plan. And the best part is if someone sees a rate that fits into their budget they can start their application, all without a pushy salesman. (We aren't pushy.)

On the other hand, we make ourselves available if someone is looking for a little assistance, and we do have other insurance products, like disability and long term care, that we currently don't have the capability of quoting online. For those kinds of concerns, we ask that you book an appointment that is convenient for you from our site and we can help you out over the phone. 

If you are in Virginia, Tennessee, Georgia, North Carolina or South Carolina, and can't sleep, visit our site. In the meantime, please stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Wouldn't You Rather Spend Your Savings On Something Fun?

I recently had a conversation with a very nice couple from Greensboro, NC. They both worked as realtors, had three children and seemed like they were doing a good job executing their financial game plan. 

As the housing market has been doing well, they have managed to sell more in the last year. They both know that things won't stay this way forever, so they put aside a good amount of money each month for their "rainy day fund". Having the discipline to this and stick to it is rare to find these days, so I told them they were doing an awesome job. 

We continued to discuss their other financial issues. They had a decent amount of life insurance on themselves (they probably could have used a bit more) and had started a retirement account  as well. This was especially encouraging because it can be a difficult task when one, or in this case both, of the spouses are self-employed. Nobody is deducting money from their paycheck for them. 

I was starting to think they didn't need me at all. However, it didn't take long to discover there was one potential landmine that needed to be addressed. I asked them a basic question. "Do you have enough money put aside to help pay bills if you are sick or hurt and can't work?" 

They thought about it for a minute and said, "Well, we could dip into our savings." 

"You're right. You can do that. But is that what you are saving for? To cover bills?"

They hadn't considered this so I offered a better alternative. "If you couldn't work, you wouldn't have that income. Sure, one of you could pick up some of the slack, but do you want to go through that? Your savings should be for things you want down the road, like a vacation or to buy a nice car. No one saves to pay bills."

"Let's do this," I suggested. "Let's take a look at disability insurance. The premiums won't break your budget but it could keep you from having to go through your savings." 

They agreed to look at a few options. As we move through the process I'm sure they will both complete applications. And since they are both fairly young and healthy, they should both have policies to protect their paychecks soon. 

Are you setting money aside each month for a rainy day or something fun like a vacation or a boat? Do you really want to have to dip into that money to cover your bills? What if you could shift that risk to an insurance company and let them cover your bills? 

If you are a business owner, a contract employee or otherwise self-employed, ask an agent to help you find a disability policy that fits your needs. 

Special Offer: If you aren't sure how much disability you need, we have a one-page PDF that can help. To get a FREE copy drop a note to chris@surffinancialbrokers.com and we'll send it to you ASAP. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Disability Insurance Awareness Month Part 2

In the previous post I discussed what Disability Insurance Awareness month was and why Disability Insurance (DI) is important to have. Along with that was some very valuable information about how it is structured and the ways it can work for you. But I do want to pivot a bit and go over how you can figure out how much coverage you need, or if you need any DI at all. 

As mentioned previously, DI is considered to be "paycheck insurance" by many because it replaces your income if you are unable to work due to an accident or sickness. As I tell my clients, just because you are out of work doesn't mean the bills will stop coming. The stress of seeing bills pile up can make an illness even worse.

And speaking of illnesses, did you know the vast majority of disability claims are paid due to illnesses and not accidents? When we talk to people about being disabled they think of car accidents and such, but in reality, cancer, heart attacks and strokes, along with other dread diseases, are the reasons why most claims are filed. Even Covid has been a huge factor in DI claims.

For a few people, a DI policy is not necessary. Having passive income streams like rental properties or other investments can provide enough money to pay their bills. But for the rest of us we need every dollar we can get our hands on if we are not able to work.

How much do you need if you are applying for coverage? Generally speaking, most group plans that you get through work will pay up to 60-70% of your gross pay, which is about what your take home pay is after you deduct taxes. 

On the other hand, if you are self-employed or a business owner, your income may not be the same each year. A different way of calculating is needed. Luckily, we have a web based quoting system for determining the amount you are eligible for based on your income, which gives us a maximum benefit amount. Again, you can apply for "up to" that maximum, but you may not need the full amount. This is when we use the "HUG" system to work out the numbers. HUG stands for: 

• Housing. How much do you pay each month for rent or mortgage?
• Utilities. Electricity, water, gas and other maintenance.
• Groceries. Just because you are out of work doesn't mean you can't eat. At the same time, it doesn't mean you'll be going to Outback every night either.

Using the HUG method, you can determine a minimum amount of coverage you need to get you by while you're out of work. Remember, the more coverage you apply for, the higher the premium will be. 

A few years ago I had a real estate agent ask me a very good question. She wanted to know if she was approved for a policy during a year when she was making good money and got disabled during a year when the housing market was down and her income was lower, would she still get the benefit she applied for? I called one of our carriers and spoke to an underwriter about this dilemma who agreed it could be confusing, but in her words, "We just want to know if this person was working at the time of the disability." In other words, yes, she would get her benefit as long as the real estate agent hadn't quit her job.

If you would like a quote visit our site and drop us a note, or book a short phone appointment. In the meantime, please stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Disability Insurance Awareness Month Part 1

May is once again Disability Insurance Awareness Month, when the insurance industry tries to let the public know the importance of having a disability insurance policy. As I say whenever I sit with a client or talk to a group, the Holy Trinity of insurance is your life insurance, your health insurance and your disability insurance (DI). That's how important it is!

Think about it. If you are sick or hurt and are not able to work, your bills just keep coming. No one is going to let you have a free pass on your car payment, mortgage or phone bill because you are a nice person. In essence, having a DI plan in place is paycheck insurance. That's why people call DI "paycheck protection".

How does it work? Depending on your employment and how you get paid there can be variations. The more common scenario is that you buy a group plan through work or your employer pays for it or both. I have seen instances the employer pays for Long Term Disability (LTD) but the employee pays for their own Short Term Disability (STD) policy.

These types of policies usually pay up to 60-70% of your gross income. Keep in mind that if your employer is paying for your policy and you should start receiving benefits, those benefits will be taxable. This is also true if you purchase your plan through a "worksite*" insurance company and they pre-tax your premiums. 

Short term DI usually pays for the first 3, 6 or 12 months of a disability, while long term DI will start paying after those dates. The key is to make sure you have coverage seamlessly throughout the time you are out of work, which is determined by your physician. 

Also, group plans will typically cover maternity for 6 weeks (8 weeks if a caesarean is called for). Too many people will drop their DI plan when they decide that they aren't having any more children. I always encourage people to keep their policy, as it is not "baby coverage" as many seem to feel.

On the other hand, if you are self-employed or a 1099 employee, like a realtor or insurance agent, you may need to look into an individual DI plan. These are structured a bit differently in that rates will be determined based on factors like:

• Your occupation. A welder or a roofer will pay more than a secretary because their job is more dangerous. 
• Your health, age and tobacco usage. Just like life insurance, the insurance company wants to know if you are a good risk or not. 
• Your income. Determining your benefit amount is dependent on how much money you earn, so the insurance carrier may ask for a copy of your tax returns. We have one company that ask for it when you file a claim. 

Another important factor is the "elimination period", which is like a deductible, but in time instead of money. If you have a 14 day elimination period, that means that the policy won't start paying out benefits until the 15th day of your illness or accident. Elimination periods can vary from 7 days to 6 months, and like the deductible on your car insurance, the higher you go, the less the policy will cost you.

Also, keep in mind that individual plans will not cover maternity.

In Part 2 of this topic we'll discuss how to determine how much coverage you need. In the meantime, please stay healthy!

*Companies that offer voluntary benefits like DI, dental, vision and other ancillary insurance products. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Who Brings Your Family Money When You Die?

Last year when my father passed away, I found myself as the executor of his estate with many responsibilities. In addition to finding a realtor to handle the sale of my father's home and hiring contractors of various sorts for quotes and repairs, I was also on the hook for making sure bills got paid. Where was that money supposed to come from?

Unfortunately for me, my father had not updated the beneficiaries on any of his life insurance policies in over 40 years, which is insane and downright criminal. All of his named beneficiaries has died way before him, including my mother who had died nine years earlier. That left us creating his estate's bank account with the little cash that was in his checking account and waiting a few months for the policies to pay to the estate instead of his heirs. 

In that time, I realized that when someone dies there are a lot of people with their hands out wanting money. Here are a few: 

1. Contractors. As previously mentioned, we had to figure in the cost of repairs and upgrades to the house. Some we dealt with and others we passed along to the prospective buyers because they were just too much for us to afford.
2. Attorneys. Our attorney let us know from the beginning of the process what the estimated bill will be at closing, so I have to make sure that money is on hand when we need it.
3. Accountants. Be prepared to pay someone to handle your deceased loved one's tax preparation for up to 2 years (if they died before filing the previous years taxes plus the preparation of tax forms for the years in which they died), plus possible estate taxes. 
4. Funeral costs. I've mentioned before how my father pre-planned his funeral but didn't pre-pay. In other words he made a wish list. Inflation took it's toll from the time he chose his casket to when he would actually use it. 
5. Lien holders. This was one I didn't expect but a deceased person still may have debts to be paid off. My father was taking money from a Home Equity Line of Credit (HELOC) which we were unaware of until his death. We settled up with the bank after the sale of the house but I can imagine other people have all kinds of debts that need to be taken care of with cash.
   

Of course with everyone coming forward and asking for money was stressful, however the one bringing us money to take care of these things was the insurance company. When all the others have their hands out, one is bring the much needed check. 

Think about your family for a minute and consider them being in a situation like that. Having to handle funeral directors, lawyers and other bill directors while grieving is a tough situation to put them in. You can avoid it by making sure you have enough life insurance available for them to handle easily and without going into debt or needing a GoFundMe page. 

To help you determine how much life insurance coverage you need, we have included on our quoting software a calculator. It asks for numbers regarding your debts, including mortgage, as well as how much savings you have put aside. You may find out that you don't need as much as you previously thought.  

If you have questions about making sure your life insurance will ease the burdens on your loved ones drop us a note. In the meantime, please stay healthy! 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Do I Have To Pay Taxes On Disability Insurance?

If you have been receiving disability benefits from an insurance company you may be wondering if you are responsible for paying taxes on those benefits. The answer really depends on the type of coverage you have and how the insurance premiums are being paid.*

For instance, if you are receiving benefits through a plan that is offered through your employer and the employer is paying the premiums, then those benefits are taxable as income. However, if the premiums are being deducted from your paycheck your benefits are tax-free.

Another time it will be taxed is when it is deducted from someone's paycheck on a pre-tax basis. Yes, pre-taxing the premium will look like you are paying less, but having your benefits taxed when you need them most is not worth the savings. (FYI Life insurance should never be pre-taxed either).

Let's consider what happens if you have an individual disability policy that you have purchased on your own. In a nutshell, the same rules apply. If you are paying for the policy with after-tax dollars then the benefits should be tax-free. However, if you own a business and have the premium payments coming out of the business's checkbook, then those benefits will be taxable. 

The IRS says that Social Security disability benefits may be taxable if one-half of your benefits, plus all of your other income, is greater than a certain amount which is based on your tax filing status. Even if you are not working at all because of a disability, you would still have to count any unearned income such as tax-exempt interest and dividends. If you are married and file a joint return, you also have to include your spouse's income into the calculation, even if your spouse is not receiving any benefits from Social Security.

This all may sound confusing but the concept is a simple one. If you are paying for your disability coverage, whether it comes from your personal bank account or through payroll deduction, you more than likely will not have to pay taxes on the benefits if you should need to file a claim. However, if the premium payment is coming from your employer or you decide to pay it out of your business account, then it will probably be taxable. 

You may not have a choice when it comes to your employer offering to pay for your coverage. I have seen instances when the employer pays for a Long Term Disability (LTD) policy, which does not start paying benefits until 3 or 6 months after the date of the disability, so the employee needs to fill the gap for those first few months without coverage with a Short Term Disability (STD) policy. 

The key here is awareness. If your policy is being paid by your employer, and if you are out of work due to illness or injury, your benefits could be much less than what you would expect. Using easy math for an example, let's assume you make $100 each week. Your disability policy pays 60% of the gross pay, so if you need to file a claim you should be receiving $60, but if it's taxed, that could drop to below $40. Ouch! And finding this out after the fact makes matters even worse if you have tried to set a household budget in place. 

With all of this in mind we still think of Disability Insurance as part of the Holy Trinity of insurance (with life and medical insurance). It's an important yet overlooked part of a financial game plan, especially in the midst of a pandemic. If you have questions about coverage, drop us a comment. In the meantime, please stay healthy!

*The advice here is in general terms and we suggest you consult your tax professional for specific information.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

4 Things To Consider Before You Buy Cancer Insurance

If you currently do not have a cancer insurance policy, you may be wondering why anyone would need or want one. In my experience as an agent over the last 20+ years, I found that the people who purchase a cancer insurance plan do so because they either have concerns about cancer in their family history or they know of someone, a friend or co-worker, who has been diagnosed with cancer. In the case of the latter, there is a realization that their health insurance does not cover all of the costs associated with a cancer diagnosis. 

Many times I have sat down with an employee of a business where I am enrolling benefits and hear how one of the other employees has recently been diagnosed with an invasive cancer. This creates a type of "wake up call" for the other members of the staff because they just assumed that their major medical coverage would cover all of the bills. 

With all of this in mind, I thought it would be a good time to cover a few things to consider before you purchase a cancer plan. 

1. Cancer plans cover a lot of out-of-pocket expenses. Items like co-pays, deductibles, travel and lodging (if you need to go to a hospital that is not in your area) and experimental treatments not covered by your insurance are just a few of the items that can cost you thousands of dollars. 

2. Not all cancer plans work the same way. Some plans are considered to be "treatment plans", which means that they will reimburse you as you are receiving treatments. Keeping in mind that cancer treatments can go on for months, and in some cases years, these plans can be "richer" as they will continue to pay out as you continue to submit claims. 

On the other hand, some carriers will offer "lump sum" plans, which will pay you a one-time lump sum of money upon diagnosis of cancer. These plans vary in price as you choose the amount of money you will need at the time of the application, some going as high as $75,000. 

I have found that some people who choose the lump sum plan do so for the convenience of only having to file a claim once and it is easier to understand. They also may want just enough to cover their deductibles. There are no wrong answers as it is a matter of preference.

3. You may not be able to get a cancer plan if you have been recently diagnosed with cancer. Unfortunately, we meet people who have just gotten a "clean bill of health" and want a policy. For those people we have to break the news that they may have to wait several years before being covered by a policy. 

4. If you have a policy already you may want to keep it. Most of the insurance companies that sell cancer insurance rarely increase the rates of their policies. Instead, they keep the old policies on the books and will develop or enhance "new policies". For example, one carrier has a policy with a "benefit builder", which means it pays more the longer you keep the policy. However, that policy is no longer being sold, but the company will let you keep it if you want it. 

As treatments evolve, so do the policies. A good example is one of the "lump sum" policies we offer that includes genomic testing. A tissue sample of the cancer is sent to a lab, which in turn will send treatment suggestions to the doctors, all at no extra charge. 

If you would like information about cancer coverage for you or your family, drop by our website or leave us a note. In the meantime, stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!