Financially worse than death, disability scenarios need your proper attention.

Securities offered through TFS Securities, Inc., and Advisory Services through TFS Advisory Services, an SEC Registered Investment Advisor Member FINRA / SIPC. TFS Securities, Inc. is located at 437 Newman Springs Road, Lincroft, NJ 07738 (732) 758-9300.

Welcome to the EnjoyMore30s Family Finance

podcast. The only podcast dedicated to making life more

enjoyable for young families by hitting on the financial topics

that tend to weigh on us, stress us out, and distract our focus

from simply enjoying life.

Hello, and welcome to the EnjoyMore30s Family

Finance podcast. We're on our sixth episode today in this

series of Your Major Money Misnomers. As always, if you

like what you're hearing, please make sure to subscribe or follow

us on Apple podcasts or wherever you listen. Clicking that star

leaving the review really, really helps other young

families out there find us. Last week we discussed Your Home

Isn't an Investment to help you better mentally separate a

property that is your home from one that is an investment

property and how the good investment mindset can cause

people to many times over extend themselves when it comes to

their home. So check that out if you have not already.

Today we're discussing if you can believe it or not what is

actually worse than death financially. And it's the

insurable scenario, that's actually more likely to happen.

And that's disability. Although it's really important, it tends

not to be one that most people have heard about as much when

you compare it to life insurance, or tend to focus on

the most. So today we're going to discuss what you need to know

about disability and the scenarios it covers as well as

what you can do to make sure you have the proper amount of

coverage. Now, I don't know about anybody else out there,

but I am a big fan of the Muppets. Growing up I loved

Sesame Street and still to this day, my favorite Christmas movie

of all time is the 1987 made for TV, a Muppets Family Christmas.

So my kids watch it now. It's it's still fantastic. So

timeless. Now if you have any kids in the area that can hear

please pause this. Make sure they're not in the room so I can

avoid scaring them and scarring them for life. All right,

everybody ready? Okay. The Muppets aren't real. They're not

they're puppets. I know. It's really surprising. If you have

never googled Muppets puppeteers, please make sure

that is the the next thing you do. You're going to see all of

these adults with their hands up the puppets holding sticks to

move their arms, contraptions around their head to aid in

movements, looking down to both see a screen on what's being

seen and keep their heads out of the shots. So they don't ruin

it. It's it's really mind blowingly remarkable. If someone

said to me, like, "Oh, we can just do it like this", I'd be

like, 'You're crazy, that will never work'. It's especially

cool if you find a big scene with like 20 muppets in the shot

and you see like 50 adults on the stage, twisting their bodies

all around to move the muppets and stay out of the picture so

they really must have a chiropractor on staff I think

for that kind of work. What you need to know that may be equally

shocking, is that you are actually four times as likely to

be disabled, as you are to die as a 30 year old. It's very

significantly more likely, yet life insurance is the thing

everyone immediately recommends when you have kids, which you

should have but it's probably not the only thing you should

have. As we covered in 1.3 the first series Survivors Don't

Care About Too Much Life Insurance, your biggest asset as

a young person is your future income potential. $100,000

salary for the next 30 years say is $3 million, ignoring any

raises or anything else. So it's really your biggest asset. And

life insurance/disability insurance, they both go towards

protecting that biggest asset. And when we look at the

likelihood of death due to such things, as you know,

hypertension, kind of like high blood pressure, or heart

disease, when it comes to life insurance, those risks have

actually gone down, as medical treatments have advanced with

the likelihood of you actually dying from them. However, on the

flip side, the likelihood of disability or being disabled by

them has gone up by roughly the same amount in many cases. So

what used to kill us doesn't kill us anymore, it just makes

us disabled. So that's great. What makes disability

financially worse than death is that if you can't work, you have

no income. So the same as death but you still need to now eat,

you still need to go to the doctor probably even more often

and you know, just overall do all that living stuff. So you're

you're here with no income, but you still need money to do all

the things that you need to do. You may need even additional

care on top of this, maybe your spouse has to work more. So it

really covers a whole range of things. In death, there are no

medical expenses, or you know, you know, having to eat and

stuff like that. So Long Term Disability Insurance

specifically, can easily be financially worse than death.

And it doesn't necessarily have to be breaking your neck. You

know for some people with specialties, let's say you're a

surgeon, if you lost a few fingers, all that schooling may

have been for nothing as your income ability may never

recover. Now, you may be saying, you know, "Well, Joe, won't the

government protect me if something happens?" Any short

term disability you may receive would be on the state level. So

like looking at New Jersey, where I'm in, you receive up to

six months of disability protection for income. However,

it's not for your whole salary, they don't say, 'Oh, you're

making $200,000? Let me give you all of that back over the next

six months.' There are limits to what you could receive. So it's

going to very likely be less than what you need to live on.

But it's still something. Long term, though there's social

security disability and that's really the only government based

option. But qualifying is really, really difficult. And

they're going to come back to regularly to check on if you

really still can't do any work of any kind. So it's not 'Can

you not do your job', it's 'Can you not work at all.' So again,

with the surgeon example, losing a few fingers may mean he can't

do his job but that doesn't mean he's going to get social

security disability. And on top of that, it's definitely not

going to be as much as he was making. What you can do though,

is make sure you understand what you are covered for and what you

aren't, and make sure you have that required protection in

place in case. So most employers have some level of coverage for

disability, or at least offer it as an option. Having at least

say 60% of your salary protected is a good place to start. That's

kind of a baseline. The one problem with relying on employer

insurance is, really of any kind, is that it's an employer

benefit. They are only as good as long as you work there. If

you were to change jobs, lose your job, your health might

change, you may not qualify anymore, you may find yourself

without any protection. Ideally, that's why we say if you can

afford to do so having your coverages outside of work, so

life insurance, and disability, long term disability,

specifically, I should say, where you can control them

always is the best. Now when obtaining a disability policy,

and we're focusing our long term disability, the main three

elements to look at after, you know, obviously, what the

monthly benefit is, what you would receive is the definition

that they're using a disability, the length of the coverage and

the elimination period. So you know, yes, you want to make sure

the benefit will replace at least 60% of your income. But

then you also want to make sure it will cover your own

occupation. Again, with the surgeon, you want a policy to

kick in if they couldn't be a surgeon, not if they couldn't

work at all. Length of coverage is how long it will last for and

usually that defaults to age 65. Now this is important, because

really what we're trying to protect against is long term

disability, because that's the catastrophic scenario, that is

what can completely blow up your finances, especially as a young

family. You got disabled tomorrow, you don't want a five

year policy to take you from 30 to 35, you want to cover the

next 65, you know, all the way up to age 65, the next 35 years

when you would be kind of retiring anyway. Remember that

$3 million of future income example from earlier. Last is

the elimination period for how long you have to wait for the

benefit to start, which is normally defaulted to 90 days.

The longer you wait to start the benefit, the cheaper the policy.

So extending this piece of it is really the easiest way to make

the policy more affordable as a long term disability is really

that catastrophic scenario. So protecting at the right amount

for the right occupation all the way to age 65 takes top

priority. Even if you know made the elimination period six

months or a year, you could probably get by for that if you

had to, but not from now to age 65. So at 30, you could probably

survive to 31, it'd be tough, but you're definitely not going

to survive to 65. So if you have to make that elimination period

longer just to make it affordable enough to have that

long term coverage, then that's generally what is recommended.

So the quick recap for today is first realize how disability may

be much more statistically likely than you realize. And you

really need to protect for that scenario. Two is that your

employer may provide or offer options to obtain this coverage

but obtaining a policy outside of work can provide that full

control if you so choose. Next, check what your state may

provide but do so with understanding there really is

not going to be an easy or likely, you know income

comparable disability coverage at the federal level that you're

going to be able to rely on. Lastly, in obtaining a policy,

make sure the coverage amount is correct, your own occupation is

covered, the coverage period extends long term and the

elimination period or how long you have to wait makes sense for

what you're trying to do.

So thanks very much for tuning in today. As always, if you are

able to implement what we're covering, that is fantastic as

always. You have less to worry about then before. You can focus

more on enjoying life, really the whole reason you're

listening I would assume today. So if you are wanting help with

these things though or you have questions you need help in

clarifying, check out that Ask Joe section on the show's

website, www.enjoymorethirties.com. Again

that's www.enjoy more three zero s .com. If you enjoyed this

episode make sure to follow, subscribe, review us on Apple

podcasts wherever you listen. There are literally millions of

young families out there I'm trying to reach and help just

like you.

The next episode is Don't Worry, We Are All Emotional Investors,

where we're going to discuss why emotions tend to play such a big

and unwelcomed part in investing and what you can do to try and

not let that work to your detriment. So until next week,

thanks for joining me today and I look forward to connecting

with you again soon.

The conversations on this show are

Joe's opinions and provided for general information purposes

only. They do not constitute accounting, legal tax or other

professional advice for your specific situation. You should

always seek appropriate advice from a financial advisor,

accountant, lawyer or other professional before acting upon

any content or information found here first. Joe is affiliated

with New Horizons Wealth Management LLC, a branch office

of TFS Securities, Inc., and TFS Advisory Services an SEC

registered investment advisor member FINRA/SIPC.