Disability

The Magnitude of Disability
by Rachel Owens

Imagine that you’ve been injured in an accident that has left you unable to work... This accident has demolished your automobile and left you with two broken legs and a very sore back. Fortunately, you have medical insurance. The emergency room and subsequent medical care will only cost you your deductible and out of pocket co-payment.

But is this the only cost? No. You are partially immobile due to two walking casts, and prolonged sitting at your desk causes extreme fatigue. The orthopedist is insisting that you have physical therapy for 1-2 hours three times a week. How can you get any momentum in your business if you must spend 10 to 12 hours per week away? This slowdown in your abilities will have serious financial implications. Your business and household overhead does not stop or disappear just because you are not 100%. This one small accident could have long-term consequences for you, your business and your family.

Disability coverage exists to provide you with regular income if you become disabled. Just as you insure your house, your car and personal valuables, experts urge you to insure the very thing that makes everything else possible—your earning ability.

Fortunately our business owner above has a comprehensive disability policy. Her policy covers total and partial disability based on loss of earnings after a 90 day wait. During the first three months, she is only able to come into the office two half-days. In this amount of time she can put out fires but not develop new business. The insurance policy covers this short-term partial disability and replaces her income.

For the next year she continues physical therapy, but periodically fatigue forces her home before the end of the work day. During this time her business suffers a 50% decline. Each month a check from the insurance company arrives to cover this shortfall. Her children are still able to attend private school, her house payments are made on time and slowly things are returning to normal. By the end of the second year she is again in full control and business is increasing steadily.

This story has a happy ending. A well prepared business owner protected herself, her business and her family. The premiums were a small price compared to the risk of losing it all.

Rachel Owens is a Certified Family Business Specialist and operates TriCircle Financial Group and Succession Strategies. She offers group and individual life, health, and disability insurance, as well as retirement, estate, and business transition planning. 714-560-9022.

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