Disability Insurance For 2025

Happy 2025! I hope you've got your New Year's resolutions in order and  that one on your list is making sure that you've got your paycheck protected. 

When I speak to groups I ask what is their number one asset is. People will say it's their house or their car or collectibles, but the number one asset you have is your ability to earn a living. Without that you really don't have all those other things.

This is why it's important to make sure that you can still earn a living and bring money into your household. If you're sick or hurt and you can't work what happens to your bills? They just keep coming and don't stop. This is how people get behind the eightball, so it's important that you have a protection plan in place. We call it disability insurance. 

Let's say that you had a box in your house that prints money. Once a year it would print enough money to replace your annual salary so just for instance, if you make $40,000 a year, once a year this machine would print $40,000.  Would you insure that machine? The answer is of course "yes". 

Just to be clear, you're the machine. You're the one making that money, so it's important to make sure that you are protecting your "number one asset". With that in mind knowing that you're going to have to need some disability insurance you've got a couple of options.

If you're self-employed you would call an insurance agent and say, "I need to get some disability insurance." The agent will give you a quote based off of your line of work, as well as your age, your health and if you smoke. 

Most of our clients go with a two-year benefit because it can take that long for Social Security disability benefits to kick in. However, some of our clients choose benefits periods from six months or up to age 67.

If you have the option to purchase disability insurance through work, get it. Disability plans through work are a little bit different because almost all employees are going to have the same occupation rating because you're all working in the same industry. Also, they may include maternity benefits which individual plans won't offer. 

One item to mention is that if your employer is paying for your disability insurance, those benefits are taxable. In other words, if you file a claim because you got sick or hurt you can't work you're only bringing home about 65-70% of your income. and you'll be on the hook for paying taxes on that money. 

One of the misconceptions when it comes to disability is that people think of people in car wrecks or sitting in wheelchairs, however about 85% of all disability claims are from sicknesses. Things like cancer, strokes and heart attacks as well as other chronic illness tend to be the majority of claims. 

One more thing I want to share is called a Return of Premium Rider. It can cost a little more, but if you keep your plan to age 67, the insurance company will return your premiums to you minus any claims paid. Think of it as a forced savings plan.

If you have any questions or if you're self-employed and would like more information, let us know.  

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. Please subscribe to this blog!

3 Reasons Why Self-Employed Don't Buy Disability Insurance 2023

One of the most undersold insurance products is individual disability insurance (DI). The reasons for this vary, but many people think of disability as something they should buy through their employer as part of a group plan. There are around 15 million self-employed Americans, the vast majority of which do not have an individual disability policy. Why is this? Here are a few reasons why this is the case.

1.Business owners, contract employees and otherwise self-employed think that DI is expensive. The premiums of DI vary because of many factors. Your occupation is a huge factor in determining the rate you pay. In a nutshell, the more dangerous or labor intensive your job is, the higher your premium will be. It makes sense that a mechanic who works with heavy machinery will pay more than a banker who works behind a desk. 

Also, the amount of coverage you need will be based on your income. The more you earn, the more money you will need if you are out of work.

Even though the price may seem high to some, realizing that DI is actually insures their income helps people see the actual value of the coverage. I ask clients what their greatest asset is and get answers like their car or home. Then I point out that their number one asset is their ability to earn a living, which makes one able to purchase the car or home. That's when they see the value of DI.

2. The application and underwriting process seem difficult. An application for DI is just a bit more involved. Like life insurance, there are health questions. Additionally, there are questions about income and the type of work one does (see above). Some insurance carriers will want to verify income at the time of the application, usually by obtaining tax records. Other companies will do this at the time of a claim. 

As a self-employed person, your income can vary from year to year. I discussed this with one claims rep from a company I represent. She understood completely and said, "We just want to make sure this person was working when they filed a claim." 

A few years ago I had a client who was a personal trainer. The application included a question which asked something like "Does your job entail heavy lifting?"  I had to write an additional letter to the underwriter that the client had to lift weights to demonstrate to his clients proper form. After much confusion the policy was eventually issued.

3. Agents don't always understand it either. I'm not trying to throw anyone under the bus here. As a matter of fact, this is one of the reasons why I personally don't do a lot of Medicare supplements. I would rather refer that out to another agent in our brokerage who understands the product and sell what the clients needs. 

I have met many good life and health agents who just do not feel comfortable selling individual DI policies. There are too many "moving parts" they say. Or they just don't understand how the policy works with Social Security disability, therefore, they can't explain it properly to their clients. Find an agent who is familiar with the product.

If you are self-employed, an individual DI policy may be a great way to make sure you can pay your monthly bills in the event that you are sick or hurt and unable to work. Let us know if you have questions, and as usual, 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!