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We're All Bullet Proof
Wednesday, 05 June 2013 19:54

Until the bullet with our name on it finds us.

Carrie Yunker, of Show Low, Arizona, has taken a proverbial beating on several news websites recently. Yunker posted a request for funds on www.gofundme.com after her daughter, Nicole, did something that young people sometimes do -- she jumped off her roof aiming for her swimming pool, and missed, hitting the concrete with a sickening crunch.

I'm not going to beat up on Carrie or Nicole, because plenty of others have already taken their shots. We've all had our moments like this.

What I want to point out is how inexpensive it is to protect one's self from financial ruin, even when you have a momentary lapse of reason, as Nicole did.

Nicole is 19 years old. She just moved into a house where her share of the rent is $300, and her share of utilities and other personal expenses is another $400, for a total of $700 per month.

Because she missed the pool, and broke her legs, she's going to spend the next six to twelve months in a wheelchair. From what I read, she's not able to work. She is, in a word: Disabled.

Her Mom reports that Nicole did not have health insurance, but even if she did, she still can't pay her bills and her credit would still be ruined, because she's disabled. If you can't pay your health insurance premium because you're sick or hurt and cannot work -- disabled -- then you're going to lose your health insurance, too. Even under Obamacare, you will lose your health insurance in this case.

What this means is that health insurance alone would not solve her problem: Loss of income due to injury.

What's Nicole missing? Paycheck Protection.

We call it Disability Income Insurance, but nobody thinks they are going to get disabled. Most people understand the concept of Paycheck Insurance, or Paycheck Protection, so that's what I call it.

How much does Paycheck Protection cost for a 19 year old with a "good job?"

Since I don't know Nicole, I'll take a guess at what her occupation might be. Let's presume she is working in an office environment, doing typical office duties (premiums vary by occupation, as well as age and gender).

An individual Paycheck Protection plan for Nicole that would pay her $1,000 per month, tax free, with benefits for six months, has a monthly premium of only $15.04 per month. Doubling the benefits to twelve months is only $18.91 per month.

In summary:

  • $6,000 of Paycheck Protection -- $15.04 per month.
  • $12,000 of Paycheck Protection -- $18.91 per month.

For about the price of twelve-pack of beer, or lunch for two at McDonald's, Nicole's Mom would not have to suffer the abuse that resulted from asking the world for help after her daughter hesitated at the worst possible moment. This plan would cover her for both sickness and injury. An accident only plan that would cover her income after breaking her legs would cost even less than the premiums I quoted above.

Why did I quote the premium for $1,000 per month when Nicole's expenses were only $700? Because the extra $300 would pay for Nicole's Obamacare Bronze plan, and we all know she needs to have health insurance, too, before she tries jumping off the roof again.

Without Paycheck Protection, though, Obamacare would not help Nicole. Nor would Social Security Disability help her for this short-term need. When it comes to paying your bills for the next six or twelve months when you get sick or hurt, and cannot work, then you're on your own to protect what you value most. 

Fortunately, it's not expensive, but you have to buy it before you need it. Once you get sick? You can't buy Paycheck Protection to cover that sickness. Once you get hurt? You can't buy Paycheck Protection to cover that injury. This is no different that the fact that you cannot buy auto collision coverage to cover the wreck that you just had.

Now, I know what some readers are thinking: "I'll never jump off my roof so I don't need this stuff."

That's not the point. There's thousands of ways one can get sick or hurt and suffer a loss of income as a result. The most important insurance to have is the kind that protects what pays for everything else, and that's Disability Income Insurance, or Paycheck Protection.

Do you need to protect your paycheck?

 

Brent D. Gardner, CLU, ChFC