What Happens to Your Financial Plan If Your Income Stops?

For many successful professionals and business owners, their greatest financial asset isn’t their investment portfolio.

It’s their ability to earn an income.

A serious illness or injury can affect more than today’s paycheck. It can disrupt retirement savings, debt repayment, family goals, business obligations and the financial plan you’ve spent years building. Disability income insurance is designed to replace a portion of your income when a qualifying illness or injury prevents you from working, subject to the definitions and provisions of the policy. At Catalano Financial, we look at disability insurance as part of your broader Financial Planning and risk-management strategy.

The starting point is understanding how much of your financial life depends on your income, what coverage you already have and what would happen if that income were interrupted for an extended period.

For physicians, dentists and other highly compensated professionals, the details can become especially important because being able to work is not necessarily the same thing as being able to perform your specific occupation.

And for business owners, disability can create another problem entirely:

What happens to the business—and your ownership interest—if you can no longer work?

Is My Employer Disability Coverage Enough?

Employer-provided disability insurance can be an important benefit, but it may not provide all the protection you need. Group coverage may limit the percentage of income that can be replaced, place a cap on monthly benefits or define disability differently than an individual policy. Benefits may also be affected when you change employers, and the tax treatment of benefits can depend in part on how premiums were paid.

For someone whose family and financial goals depend heavily on their income, it can be worth comparing employer coverage with the amount of income that would actually need to be replaced during a long-term disability.

Individual Disability Insurance

An individual disability income policy may provide additional protection tailored to your income, occupation and financial circumstances.

When evaluating coverage, important considerations can include the policy’s definition of disability, monthly benefit, elimination period, benefit period, exclusions and available policy features.

Catalano Financial provides disability insurance planning in The Woodlands, Texas, for professionals, families and business owners who want to protect the income their financial lives depend upon.

The objective isn’t necessarily to replace every dollar you earn.

It’s to determine what would need to keep happening financially if your paycheck suddenly stopped.

Disability Insurance for Physicians, Dentists & Other Professionals

For physicians, dentists and other highly compensated professionals, your ability to perform a specialized occupation may be one of your most valuable financial assets.

That makes the definition of disability especially important.

Why Own-Occupation Coverage Matters

Some disability policies may provide benefits when an illness or injury prevents you from performing the material duties of your own occupation, subject to the specific policy definition and provisions.

Consider a surgeon who develops a medical condition that prevents performing surgery but can still teach, consult or work in another capacity. Whether that surgeon qualifies for disability benefits can depend significantly on how the policy defines disability.

That’s why professionals should look beyond simply asking:

“How much disability insurance do I have?”

Other important questions include:

• How does the policy define disability?
• Is my medical or professional specialty recognized under that definition?
• How much monthly income could the policy replace?
• How long is the elimination period before benefits begin?
• How long could benefits continue?
• What exclusions or limitations apply?
• What options are available for increasing coverage as income grows?

For professionals with significant earning potential, disability insurance can be an important part of protecting both today’s income and the long-term Financial Planning strategy that income supports.

The more your financial future depends on your ability to perform a specialized profession, the more important the details of the disability policy can become.

Disability Insurance for Business Owners

For a business owner, a disability can create two financial problems at the same time.

How will you replace your personal income—and what happens to your ownership interest if you can no longer work in the business?

Individual disability income insurance may help protect your personal income. But when a business has multiple owners, the buy-sell agreement may also need to address what happens when an owner experiences a long-term disability.

Funding a Buy-Sell Agreement After Disability

A buy-sell agreement can establish when and how a disabled owner’s interest will be purchased. But the agreement itself doesn’t create the money needed to complete that purchase.

Disability buy-out insurance may be used to help fund the purchase of a qualifying disabled owner’s business interest, subject to the policy’s definitions, waiting periods, benefit limits and other provisions. That makes coordination important.

The buy-sell agreement, business valuation, ownership structure and insurance coverage should be designed to work together—and reviewed with the appropriate legal, tax and insurance professionals.

For business owners, disability planning may therefore be an important part of a broader Business Owner Planning and succession strategy.

A buy-sell agreement answers what should happen. The funding strategy helps determine whether it actually can.

What Does Disability Insurance Cost?

The cost of disability income insurance depends on factors such as your age, health, occupation, income, amount of coverage and the specific benefits and features included in the policy. Because disability policies can differ significantly, price alone doesn’t tell the whole story. The definition of disability, benefit period, elimination period, exclusions and optional features can all affect both the coverage and its cost.

How Is Peter Compensated?

When disability insurance is purchased through Peter Catalano, the insurance company may pay Peter a commission or other insurance-related compensation.

That compensation is separate from any financial planning or investment advisory fees you may pay Catalano Financial. You are not required to purchase insurance through Catalano Financial and are free to work with another insurance professional. 

The goal is not simply to find the least expensive policy. It is to understand what you’re protecting and whether the policy will do the job you expect it to do.

Start With Your Financial Road Map®

If your family’s financial security, professional career or business depends heavily on your ability to earn an income, disability risk deserves to be considered as part of the bigger picture.

Your Financial Road Map® helps us understand what’s important to you, what your money needs to accomplish and where you stand today. From there, we can identify whether income protection deserves further attention.

Financial Road Map® — $500

A 60–90 minute working session designed to help organize your financial life, clarify priorities and identify opportunities and decisions that deserve attention.

Prefer to learn more about Peter first?