Mortgage Disability Insurance

Individual Disability Insurance provides a portion of a worker’s income if they become too sick or disabled to work.  Many small business owners have a variety of insurance plans such as theft, life, health and fire, but only a small percentage offer plans that cover themselves or their employees in the case of long-term disability.   Many experts believe the business that does not offer this kind of coverage is asking for trouble.  According to the National Association of Insurance Commissioners, a person aged 35 has a 50-percent chance of being so sick or injured that they cannot work for at least three months before they reach the age of 65.  The older they get, the higher the chance of long term disability.  Some experts believe this threat is the greatest risk to a business, especially if a key executive is struck by illness or injury.

There are different kinds of long term disability packages, group long-term and individual disability insurance for the long term.  For the purposes of this article we will focus on the individual policy.  These are more expensive than group packages, but they offer greater protection.  They also provide a higher percentage of continuing income.  The most affordable way to afford these premium products is if an employer and at least three workers purchase a plan.  Under this structure, individual coverage can be secured for about $1,500.00 per year.  The reason these plans can provide a higher replacement income is because employer sponsored individual long-term disability, or LTD policies, preclude income taxes.  The worker, not the company pays the premium with after-tax dollars.

When shopping for this kind of insurance, consider the length and amount of coverage, the cost of the policy, insurer options such as the ability of the insurer to increase the premium, and the percentage of the salary to be paid.  If it is insufficient, you might want to add mortgage disability insurance to your shopping list.  Since life is filled with unintended consequences, individual disability insurance is something every employee and small business should consider.