What’s the best policy for real estate agents?
As a real estate agent, it makes sense to have a policy that protects you from a decrease in income as well as a total disability. Many disabilities do not prevent you from working, but definitely have an impact on your ability to earn the same income. You should look for a policy that provides you with an income following a period of disability. This can help with your transition back to work since you may need some time to restart your prospecting and marketing efforts in order to generate new listings and sales. It’s important to work with a broker who understands your business and knows which carrier will offer you the most value based on your years of experience and earned income.
Do I need to protect my income?
I think the better question is, could you afford the consequences of not having long term disability insurance? Undoubtedly your income is very important to you. Your way of life depends on it. Most successful real estate agents understand this simple fact and, therefore, take appropriate measures to protect their most important asset — their ability to earn an income.
I heard disability insurance can be expensive?
It’s more affordable than you may think. Most disability policies for real estate agents cost between 2% – 6% of your annual income. The best time to purchase disability insurance is when you are young and healthy. Remember, money funds the policy but health buys it. As soon as you have a medical concern, the insurance company would likely exclude anything to do with that medical concern or decline you for coverage altogether. Some policies also offer a return of premium option, where you can receive up to 50% of your premiums back every 7 years.
What exactly is disability insurance protecting?
Disability insurance simply protects your paycheque in the event that an injury or illness prevents you from working. Many may think of a disability as a tragic physical accident, however, less than 10% of disabilities are actually caused by accidents. More than half of all claims relate to mental health, cancer and cardiovascular diseases.
How much is your paycheque worth? Take a second and do the math. If you are 35 years old earning $80,000 per year, you would earn $2.4 million in income by the time you are 65. This does not take in consideration that your income should increase overtime with inflation. If you factored in a 3% raise each year, you would earn $3.8 million by the time you are 65.
How much income protection do I need?
You can protect two different things with disability insurance. One being you’re fixed expenses, this would include items such as your mortgage, car payments, utilities, taxes, child care, investments, etc. The other thing you may want to protect is your lifestyle, this would include things such as your shopping, entertainment, travelling, hobbies, etc. I would always recommend to have at least enough coverage to ensure that you can pay all of your bills during a period of disability. That being said, many clients worked hard to get where they are today and enjoy their current lifestyle. It would be difficult to adjust these spending habits during a period of disability and this is why you should consider protecting the amount of income you currently spend to prevent any financial stress at time of claim.
You should insure what you can’t afford. Can you afford to go without a paycheque?
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By Jeff Romansky
CHS, CPCA Principal, SecurePlan Insurance Solutions
Jeff started his insurance career in 2006 by helping hundreds of insurance advisors grow their business by providing them with comprehensive advise, consultation and training. After nine successful years, he decided to take his knowledge and start his own practice to ensure his clients are getting the best advice. SecurePlan is an insurance advisory and consulting firm specializing in group benefits as well as individual insurance benefits for professionals, executives and owner-managed businesses.