If you don't believe it can happen to you . . .

Wayne and Betsy

In 1987, Wayne and Betsy came to me to review their financial planning needs.  During the course of the meetings that we held, it was determined that Betsy's income, which was $3,000 per month, was the main funding source for their mortgage payments.  Wayne's income was used to cover the other family expenses and education for their child.

I recommended to Wayne, that since his company provided disability coverage for him, there was no need for a disability policy for him personally.  In the case of Betsy, I recommended a disability policy that would protect her income should she become disabled.  At that time, Betsy was 43 and Wayne 58.

Betsy and Wayne were reluctant to make an investment of approximately $2,000 per year for the coverage. Ultimately they did, although Wayne thought it was a poor investment.

Nine months after they took out the policy, Betsy was rear-ended in a car accident and seriously injured.  Her ability to sit at a desk, type, do paperwork, or do any type of office work was destroyed, and she was totally and permanently disabled.  At age 43, she had no income (Federal and state disability benefits ran out in less than one year.)

However, after a 30-day waiting period, her new disability policy began to pay benefits.  She received, and continues to receive, $1,800 per month, completely tax-free, since the policy was purchased from the couple’s personal income.  She will receive that income until age 65, when she will then have her IRA accounts and Social Security.  The total amount of benefits she will receive will be about $500,000 over the years from age 43 to age 65.