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income replacement
Your ability to earn an income is your most valuable asset. Did you know a 30-year old couple would earn more than two million dollars by age 65 if their total family income averages $55,000 for their entire careers, without any raises? But, if something happens to you, how will your family replace your earning power?
In the Event of Death
There are two scenarios of what could happen to replace your earnings should you die:
SOCIAL SECURITY
The Social Security benefit your family receives is based on your earnings history at the time of your death, and is limited to a maximum benefit.
The monthly Family Survivor Benefit is payable only until your youngest child reached age 16. Your youngest child will then receive a monthly benefit only until age 18 (19 if he is a full time student).
Your surviving spouse receives NO BENEFIT until the age of 60 (this is known as the “blackout period”). Then, beginning at age 60 y our surviving spouse receives a lifetime benefit.
The VDR Smarter Solution: LIFE INSURANCE
While life insurance cannot replace you, it can be used to replace all or a portion of your earning power.
At your death, life insurance proceeds can be used to:
- Pay the cash needs that arise at death, like medical and funeral expenses, debt liquidation, mortgage or rental payments.
- Assist in financing your children’s education
- Supplement other sources of retirement income
- Invest as tax-deferred assets
In the Event of Illness or Disability
While most Texans insure their lives and physical possessions, such as their home and cars, many overlook the need to protect their most valuable asset: the ability to earn an income. Not being able to work, due to a job loss or a disability, is often financially devastating.
SOCIAL SECURITY
At the Federal level, there are two primary programs offering disability insurance. The Social Security Administration administers both.
- Social Security Insurance (SSDI) pays benefits to qualified individuals under the age of 65 regardless of current income. Benefits are based upon your Social Security earnings history.
- Social Security Supplemental Security Income (SSI) pays benefits to qualified infiducals who are either over 654, blind, disabled, or with limited income.
A few individuals manage to qualify for disability benefits from Social Security. However, the SSA definition of “disability” is so strict that over 605 of initial claims are rejected.
GROUP DISABILITY INSURANCE
Many employers will provide or make available disability insurance on a group basis. Many of these employees are still at a substantial risk because group disability policies seldom provide you with more than 60% of your monthly salary. Income taxes can be a further issue. If the employer is paying the full cost of the coverage, your disability benefits will be fully taxable.
The VDR Smarter Solution: INDIVIDUAL DISABILITY INCOME INSURANCE
Although individual policies may cost you more, as long as you pay the premiums the benefits are not taxable. Plus, an individual policy allows you to tailor its terms to fit your own needs.
At Van Dyke Rankin Insurance, we offer a free insurance review to help you identify if you have a need and an accurate analysis to the most effective solutions if needs are discovered. Complete a Needs Analysis and fax your information to 979-836-5059 or call us at 979-836-5636 (or toll free 1-800-460-5636) and we will meet with you and review your income replacement needs!