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Disability retirement planning: Help for the unfortunate

Check Out Your Disability Retirement Coverage.

A disability retirement plan is a great benefit to have at work. It gives the fortunate employees who are unfortunate enough to become disabled and incapable of working, while in service, a lifetime income. It’s about retirement from work on health grounds rather than normal retirement because of age.

It is good advice to check whether your employer has a disability retirement plan as well as a service retirement plan. You may be eligible for a lifetime income when you reach a minimum age specified in the plan, normally 60 or 65 and if you have completed a specified number of years service with your employer.

It is important to do this because the contributions that you and your employer make to a retirement plan such as a 401(k) or other IRA will cease along with your income, if and when you become disabled. It is also important too to check the small print of your disability insurance policy if you have one. Check whether your disability insurance policy pays you beyond 65 because this is the worst time for your income to stop. Because you stop putting money into an IRA after your disability retirement, as did your employer, you may not have enough income from age 65 on.

There is an insurance product for just such an eventuality. It is a specific sort of disability income protection. It protects your retirement fund contributions in the event of your disability retirement. This kind of disability policy not only pays you an income but also contributes to a savings fund or special trust with investment options just like a retirement plan. The aim of this fund is to build an annuity from which you can draw income when you reach 65. Death before 65 means this income goes to your beneficiary.

The choice of insurance companies that specialize in protecting your retirement income in the event of disability is large. AIG for example have both a short-term disability policy (employer sponsored) and a long term insurance protection. It is important to go with a company that has proven financial strength so that they will be there to provide your income in retirement. Boston Mutual offers disability income insurance for individuals and has been doing so for more than 100 years. Shop around for the policy that meets your needs and look in detail at Guardian, The Hartford, Mass Mutual and Metlife. A good comparison website is www.disabilityinsurance.termlifeamerica.com