Should an illness or injury prevent you from working for an extended time, loss of income directly affects your lifestyle and ability to provide for yourself or loved ones. Concurrently living expenses continue and are likely to increase as assistance may be needed at home or higher medical expenses incurred. Disability or income replacement insurance makes a difference. As this coverage provides a monthly benefit should you be unable to work (due to illness or injury), your standard of living is not compromised.
This insurance is crucial within a financial plan. Those who are single and solely dependent on their earnings, often find it more relevant; however, couples relying on two salaries have difficulty imagining how to live on just one. Notably, disability strikes more often than we may think.
Though premiums may seem costly, it is important to understand that potential total benefit pay-outs can be significant. For example, a 40 year old earning $85,000/yr could receive in excess of $3,500,000 (benefits paid to their age 65) should disability strike!
Personal and Business Coverage
Disability, or income replacement insurance, is designed to replace income should you be unable to work because of illness, or injury.
Typically the insurance is designed to replace two-thirds of your regular income. This income gap is meant to encourage a claimant to return to work as soon as possible.
INCOME OR WAGE LOSS REPLACEMENT PLAN (WLRP/ILRP)
This is an arrangement between an employer and employees whereby the employees are provided an income during disability. Individual disability insurance contracts are issued pursuant to a common plan. The ILRP/WLRP is an alternative method of grouping individual disability income policies without the use of a Health and Welfare Trust and may be established for as few as 2 employees.
The Basics of an ILRP:
- The employer is the owner of the individual disability contracts
- The premiums are paid by the employer and are deductible business expenses
- The premiums paid by the employer are NOT taxable benefits to the employees.
- The disability benefits under the policy will be paid directly to the employee.
- Any disability benefits received by the employee while a member of the plan will be taxable.
Business Overhead Protection:
A Business Overhead Expense policy is designed for principals of closely held businesses or practices and owners of small businesses. It is an expense reimbursement policy covering fixed monthly expenses required to keep the business viable until the return of the owner, after a period of disability. This allows operations to continue until the insured either returns to work or decides the future of the business.
It is most vital within a business where the owner’s ability to come to work makes directly impacts business continuity. Ideal candidates are physicians, lawyers, accountants, engineers and other individuals whose firms depend on their direct ability to generate income. Premiums are tax-deductible as a business expense.
Disability Buy Sell
Funding of Buy/Sell Agreements (Disability, Life and Critical Illness coverage)
These policies are designed primarily for partnerships and professional corporations comprised of two to five principals though consideration may be given to those with 6 to 10 shareholders. Policies are designed to provide necessary funding required for the purchase of shares upon the death or illness of a partner.
For Disability Buy/Sell coverage, it is required that the business be operational, or partners have been in association, for at least three years. The business should have a net worth of at least $50,000. The policy can be owned by the corporation or partnership (entity purchase), or each shareholder may own a policy on each of the other owners (cross purchase). The existence of a formal buy sell agreement is highly recommended.
Key Person Protection
Key Person Protection is designed to provide coverage for a financial loss to an employer due to the disability of a key person. This person is one whose service is of such nature that their disability or illness would cause owner to suffer substantial financial loss. These employees offer their employer knowledge, skills or talent that few others can duplicate. Their industry or their work may be so specialized that there would be few with similar skillsets. These may not be totally acquired through education or experience but attributable in part to creativity, talents and interests.
Disability Business Loan Protection
Business Loan Protection policy is designed to make funds available to pay outstanding business loans and loan interest should the business owner become totally disabled. The company must be a partnership, sole proprietorship or professional corporation in business for at least three years with a net worth of $50,000. Eligible loans include those for equipment, property and buildings used for the sole purpose of operating a business. The lump sum plan also covers lines of credit and account overdrafts.
Retirement Protection:
A sudden, unexpected accident or illness can dramatically affect one’s ability to earn an income and meet current financial obligations. This can also have a drastic impact on the ability to invest for the future. Not surprisingly, retirement savings are one of the first casualties of disability; funding is curtailed and often funds previously been set aside for the future are tapped.
No financial plan is complete without guaranteed funding for retirement. A Retirement Protection Plan assists in maintaining deposits to a retirement savings program while disabled.
This information is generic and you should look at your quote and policy conditions before purchasing. Ektos Financial offers a selection of Disability Insurance Plans that offer protection to you and your loved ones.
What make us different?
We listen and we wait for our turn to speak.
We are committed to establishing a relationship based on keeping promises, respecting boundaries, communicating and understanding what you want to accomplish in life.
We design and implement financial plans that integrate cash flow and debt management, insurance and investment planning, as well as retirement and estate planning.
Moreover, we will create a financial plan that coordinates the work of financial, banking, insurance, investment, accounting and legal professionals.
Check the About Us page for more details.
Getting Started:
Contact Jose Cid at 604 229 2332 or fill the contact form below.