If you were to be diagnosed with cancer, would you be able to take a year off work to recover? Would your business continue running without you? Would your family still have the income that they needed to be able to keep up with their lifestyles and bills while you took that time offto recover?
Hi, my name is Christina Wyatt. I am a Certified Financial Planner with Bauld insurance, alocally owned and operated insurance company. Today I’m going to talk to you about critical illness and disability insurance and how it can protect you and your family.
I was in a meeting the other day with a recent grad and we were sitting down talking about how he had just spent seven years in school and getting his education invested 100 grand and himself. He had his business up and running, it was doing really great. And he was on his way to making you know, millions of dollars. Throughout his career, we talked about the importance of protecting that not just the 100,000 that he invested in school, that lifetime income that he’s going to receive over his career journey. Gotta have a little bit of a mind shift here. It’s protecting that future income not today, tomorrow.
I like to think of critical illness almost like your own GoFundMe account. We see it all the time, the community pulling together to bring funds needed when someone’s been diagnosed with a critical illness and they need that extra income. Consider this your own GoFundMe account that you’ve put in place. How it works. Well, you know, you pay a set premium for a contract with the insurance company viewer to be diagnosed with one of 25 illnesses and the typical contract live for 30 days, they’re going to send you a non taxable check for that amount. If purchased personally, you’re going to receive a tax free lump sum check can use for you know medical expenses, monthly bills or a trip to Disneyland for your family write anything you want to use it for. If corporate owned the benefit is paid to your business account, and you can use it for salaries, business expenses, and anything else that you need to keep your business running while you take that necessary time off.
Here’s a question I like to ask my clients. If you could no longer work, would your family still need your income to maintain their lifestyle needs and wants? Could your kids still play their sports or take their music lessons? Could you continue living in your home and pay the mortgage a 40 year old making $100,000 A year has the potential to earn $2.5 million by age 65. That’s the income we’re protecting. When we purchase a disability policy. If you were to become disabled through an illness or an injury, a disability plan will pay your after tax salary monthly to you to cover those expenses.
The Disability Insurance is different than a critical illness plan because it continues to pay a monthly benefit right up until age 65. Or sometimes even longer. The critical illness just pays that one lump sum. So you know, they’re both beneficial in their own ways. You can also purchase plans to protect your business. These are called Business overhead expense plans. So you pay a monthly premium through your business and, if you were to become disabled, it will cover your salaries, your business expenses for a period of time, well, you’ve got the time to go out there and make a permanent plan for the future of your business.
We invest 1000s, or even hundreds of 1000s into our education and our businesses. We do this and knowing that that investment into ourselves is going to pay off through our earnings. But what happens if you become disabled and that income stops, you’re not just losing that initial investment that you’ve made, but you’re also losing those potential earnings. When you stop and really think about it. This is huge. This is our livelihoods, our lifestyles, our family’s lifestyles that we are protecting when we purchase disability insurance.
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Other videos in this series for business owners: