Mention the topic of Arizona disability insurance and often the response is that we are in no hurry to purchase such coverage, or have no need, or no money. Of these responses the most important one to discuss is “no need.”
As a rule, rarely will any of us purchase something we believe we don’t need. The challenge is to ask ourselves several questions to hopefully uncover whether there is truly no need or not.
Ask the average person the longest vacation they have taken and the answer is usually “a couple of weeks.” Ask them why they don’t take three or four month vacations and the answer is because they have a job and must work.
Now imagine an accident or illness that prevented you from working for several years! Would such a scenario cause an income problem? Typically, the answer is yes.
If you had a money printing machine that generated thousands of dollars each year, you would likely insure such a valuable machine. Your ability to work is the money printing machine. All current and future income is often our most valuable asset.
Once a need for disability insurance is discovered, the next step is how much? Firstly, add up the monthly expenses such as mortgage, taxes, food, college, utilities, auto, etc. With this number you will have a good idea as to how much disability income is required. (Always pay for disability insurance with after tax dollars so that the benefit is tax free.)
In the next blog post we will discuss what to look for in a disability policy, and what to expect when applying.