Real estate agents always have a lot on their plate. You may be caught up with the hustle, from staging houses to driving around town to meet clients. If you are doing well in your career as a real estate agent, chances are you are saving up for future investments. In such circumstances, it could be difficult to foresee a phase where you may lose your ability to work.
Accidents or disabilities often happen without prior warning, and we must be financially prepared when things go downhill to protect ourselves and our near and dear ones. With disability insurance, you can secure your monthly earnings if you are temporarily injured or permanently disabled and cope better.
This article will help you understand why realtors need disability insurance and how you can secure your future if things go south. Before we begin, let’s first understand what disability insurance is.
What is a disability or income protection insurance?
Disability insurance is a form of insurance package that offers coverage if you lose the ability to work and earn a living. There are two types of disability insurance: long-term disability insurance or permanent disability income insurance and Sickness and injury disability insurance.
While the former will protect you financially if you lose the ability to work permanently, the latter will cover you with a monthly benefit amount for a certain amount of time, depending on the severity of your condition. The insurance gets approved only when you are physically unable to work and your condition is approved as a disability by the insurer.
Now that we understand what disability insurance is, let's explore how disability insurance works for a real estate agent.
How does disability insurance work for a realtor?
Chronic conditions carry a higher likeliness of causing a disability than accidents; hence securing your future finances for rainy days is imperative. If you are applying for disability insurance as a realtor, there are several factors that you need to take into consideration. Let’s take a look at these:
To be eligible for disability insurance, either short-term or long-term, you will need to fit into the definition of disability of your insurance provider. You need to show a medical certificate as proof by a licensed physician that you are unfit to continue work.
If you have resigned on your own accord or cannot work for any other reason that does not fit within the conditions of your insurance provider, your claim will be rejected.
When you apply for disability insurance, the insurers will analyze your monthly income and industry of work and categorize you into an occupation class, which will determine the premium. This ranges from a descending scale of 4A, 3A, 2A, A, and B.
Realtors are usually classified under class A, implying they have a higher likeliness to experience disability in old age. As the classes descend, the risk of mental or physical disability increases. However, if you have good experience in this industry and earn on a higher threshold, you have the potential to upgrade to a higher occupation class to reduce your premiums.
After you have applied for disability insurance, there is a waiting period that you need to wait out for your claim to be approved. The waiting period is usually 90 days or 120 days. The longer you wait for your claims to be processed, the lower the premiums. As a result, if you have an emergency fund, you can self-insure until the insurance funds kick in.
The benefit period refers to the period you wish to be insured. If it’s sickness and injury disability insurance, you will most likely be covered for up to five years with a monthly benefit.
Alternatively, if you are opting for long-term disability insurance, you should choose the longest benefit period that covers your income till the age of 65.
Benefit Amount Per Month
The maximum benefit you can derive from your disability insurance depends on your monthly income. Insurers can cover up to 80% of your monthly income depending on several factors, such as your age, condition, the severity of your disability, gender, etc. Now that you have an understanding of how disability insurance works for realtors, let’s explore the benefits of disability insurance to be able to comprehend the advantages of this kind of coverage.
Benefits of disability insurance
1. Ensuring your income is flowing in even when you can’t work
As a realtor, your job involves meeting different people, moving around and showing other properties, and building a strong network. If something unfortunate happens and you can’t continue doing the same, you should have a resource to fall back on instead of feeling helpless and trying hard to make ends meet.
With disability insurance coverage, even if your career takes a hit, you can still support your family and sustain a standard of living where your basic needs are met.
2. Disability insurance coverage can be customized
One of the best parts of disability insurance is that you can customize it according to your benefits in various ways. For example, by opting for a higher premium amount, you can ensure that you receive the coverage within the shortest span from the moment you apply for the claim. You can choose your coverage period, which determines the premium.
If you wish to receive coverage for a more extended period and secure your finances, your disability insurance provider can customize the plan for you. You can also sign up for stepping policies, where your premium amount increases over some time in sync with your increase in income.
Briefly, disability insurance comes with many benefits and terms you can customize to benefit you the most.
3. Fighting inflation
Disability insurance will help you counter inflation as the premium will not remain dormant in your account. The payout amount increases every year on compound interest by a fixed percentage. If inflation occurs during the payout, you will be covered reasonably to sustain and maintain a certain standard of living.
4. Protect your loved ones
If you are a budding real estate agent with a family to care for, you cannot risk going unpaid or reaching a point where your family members have to look for other means of earning. With disability income insurance, you can keep your family afloat during hard times and continue to meet their expenses.
Besides, if you are saving up for milestones in your children’s lives, such as marriage or paying off a loan, you can continue to pay off with the coverage you receive.
5. Paying off debts and loans
Learning about how income insurance can help us protect our loved ones brings us to our next point of benefit: paying off debts. We must ensure we are financially stable to properly care for our loved ones.
If you have taken loans or mortgages that you are clearing off month-by-month, and you were to go unemployed for a couple of months, you might face a penalty if you cannot pay off your debts. This is where disability income insurance can help you pay off your loans and mortgages on time and save you from the mental pressure of making payments on time.
6. Support in helping you get back on your feet quicker
Going out of a job affects us more than we can reasonably imagine. It can have short-term and long-term negative consequences that enable us to make life changes, such as settling for a lower standard of living, sending children to different schools, or taking out high-interest loans only to meet immediate financial expenses or loans.
Our world can turn upside down before we know it, and our loved ones become casualties in such scenarios. With disability insurance coverage, you can meet your monthly expenses while finding a way to get back on your feet.
If you are opting for permanent disability coverage, in that case, you will be receiving benefits for a considerably longer period, which will provide you with the opportunity to find different sources of earning and become stable gradually.
Make smart investments with disability insurance!
Regardless of your financial stage, disability insurance can act as the financial safety net that helps you in unexpected circumstances and help you survive the storm. A wise financial investment can go a long way and reap huge benefits. Disability insurance is an investment that will be immensely helpful if you meet with an accident or a permanent disability.
From choosing the coverage amount to the waiting period, disability insurance offers much flexibility to ensure you get the best out of this coverage model. To learn more about disability insurance, check our other blogs on our Asteya website.