What it is
Retirement plan disability insurance continues contributions to a retirement plan even when there is a total disability. Once claimed, a policy pays benefits to a trust, where the insured can invest the funds. Then at age 65 or 67, the trust proceeds are paid to the insured. Some investments that are commonly part of a policy include:
- pension plans
- stock plans
- IRAs and profit sharing
How to explain it
Stop and think. If you were disabled and struggling to make ends meet on less than your full income, what is the first thing that most people stop doing? Yes, you guessed right — most people stop saving money. After all, they barely have enough to cover today’s expenses. However, it’s dangerous to stop saving for retirement. That’s why this protection is so critical. If you become disabled, the plan continues contributing to a retirement fund. You will have peace of mind knowing that a comfortable life awaits, after retirement. Do you see why this is such an important safeguard?
When to offer it
Retirement plan DI is a great product to offer to clients over 45, entering their most crucial years for savings accumulation. To maximize protection, it should be combined with an individual disability insurance policy.