So I got a financial planner now but one question......

A lot of folks buy life insurance, but few actually die before their time. But few seem to buy disability insurance, yet your chances of being disabled 3 months or longer during your work career is something like 1 in 3. While your income will likely stop, your bills will still be there (you have to live and eat), plus you may have all kinds of new expenses for medical equipment, supplies, drugs, and treatments.

If you have an income stream that you depend on, you should insure it. Either take out formal insurance, or have enough money invested so you can live off of the income.

-john-

It's expensive insurance. For 75% of my monthly income ($2150) which is what the insurance company will pay out for such disabilities and illnesses the monthly premium is 131.00 per month. I pay for these things yearly so it's over $1000 a year. Plus in Canada we have sales taxes on top of the insurance premiums and I think provincial tax may be added too but I'm not sure but the tax will either be 6% or 14% in my place of residence. That's sounds like alot of money. That'll be more than my car insurance. I'm a blue collar worker and will be for some time. My salary is my primary source of income. It'll be a long long time before I could live off of investments. Will these premiums at my income level hurt my financial health prospects or help it. I can't decide on this one.....

It depends on how much it costs. One thing you don't mention is if there is an income cap to which your 75% applies (if you make a million dollars a year, will they compensate $750K -- most will have a cap) and if that cap makes sense. My cap was okay before and it's not that great now but it's better than nothing and I pay only $6/month.

I personally think such insurance is a good idea

unlessyou have some other source that can guarantee to take care of you(like rich parents who will not go back on their word). And even thenI prefer to take care of myself first if possible.

--Ram

So you got yourself a financial planner? Does she work for an insurance company by any chance? If so, you do not have a financial planner, you have a an insurance salesperson. What certifications does she have? A CFP or something equal? Look closely at the salespersons credentials and then let's talk diability insurance (which as previously stated is extremely important). BTW, since some stats were thrown around, I believe only 2% of term policies are paid out. Of course that's a good thing, but just something to keep in mind in your risk/reward calculations.

Dave

Before you commit to any insurance of this type check out your own company and see if they offer short term or long term disability insurance. Insurance that covers cancer and loss of limbs is usually much more expensive than it's worth.

I've never had insurance before except for my car, and that's only because it's the law

Shop around. A co-worker looked to this and found cheaper external plans than what the company offered. The silly duck commercial is one of these insurance companies. But I have not idea as to their costs or quality of service.

It also maters in the US where the premiums are paid with pre-tax and after tax money. Then the disbrusements are taxed or not taxed, opposite the sense of the premiums.

"One Man Rodeo" wrote

Do you advocate this for others? I say, when asked about health insurance, that I am "self-indemnified." At the same time, I will not argue with anyone who asserts that this is some kind of "delusional euphemism." Fact is I am taking a risk. I prefer not to promote the notion of doing as I do on this point, particularly when the person inquiring has a family s/he must support.