Young couple on the couchIndividual Disability Insurance May Not Be Enough

Hopefully, you already protect your ability to earn an income with an individual disability insurance policy. That is designed to maintain your current standard of living should you suffer an illness or accident and pay benefits normally until retirement age. But what if you have a very long-term claim or become permanently disabled? Your individual policy is probably not going to be enough to also properly fund your retirement account while on a claim, you are going to need something else for that!

When Your Income Suddenly Stops

What would happen to your retirement funding if you were to become disabled around age 35 and your income suddenly stopped? How would you continue to fund your retirement account? Chances are you will not have saved enough to retire at that age (you may become disabled at age 35 or 47-- who knows?), but most everyone will not have saved enough to retire at that young age.

What are the Odds it Will Happen to Me?

You may think that you will never become disabled, but those under age 35 have a 33.3% chance of becoming disabled for at least six months during their working careers. Men have a 43% chance of becoming disabled during their working years and women have a 54% chance! You may want to look into a special disability insurance program that replaces your retirement savings in the event of sickness or injury that prevents you from working. This Retirement Protection Plus (RPP) disability policy is available to you and can be purchased regardless of how much other disability insurance coverage you may have already. 

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The Retirement Protection Plus (RPP)

RPP is designed to help you maintain a healthy retirement strategy by replacing contributions made to a defined contribution plan during a disability. Once you are eligible for benefits, a monthly benefit insuring up to 100% of your retirement contributions, including any employer matching contributions, will be paid into a trust established by you. When you turn 65, the assets can be distributed directly to you. You may also choose an annuity option that will allow you to take the funds over a period of time to allow for further tax-deferred growth. 
Below is an example of how a retirement plan may fare with and without an interruption of benefits below:
retirement protection plus

Chart Assumptions: $2,000 per month contributed to the plan beginning at age 35. Total disability occurs at age 36 and contributions stop. Insured eligible for benefits under the policy, with payments beginning 30 days following the 180-day elimination period. Disability continues to age 65. 8% average annual rate of return, based on the average annualized return of the S&P 500 from 1/1/90-12/31/10, 8.23%. This rate is for illustration purposes only. The actual rate of return may vary.

A long term disability, if not protected by one of the best disability insurance policies and a retirement protection plan, can turn into instant retirement. Many people today rely on their employers to provide appropriate insurance. Your employer may offer you group long-term disability insurance, but there is a good chance you have either no LTD, or what you have is not enough, and your employer almost definitely does not offer retirement protection. 

This retirement protection is an essential part of your overall financial plan. You do not want to enter into retirement without enough assets to live comfortably. 

Furthermore, the strength of the company that offers the coverage is extremely important. A disability policy is a promise to pay a benefit when you need it most-- and a promise is only as good as the company that can honor it.


Individual disability insurance policy Forms 18ID, 18UD and 18GI underwritten and issued by Berkshire Life Insurance Company of America, Pittsfield, MA, a wholly-owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY. Product provisions and availability may vary by state. In New York: These policies provide disability insurance only. They do not provide basic hospital, basic medical, or major medical insurance as defined by the New York State Insurance Department. For policy form 18ID, the expected benefit ratio is 50%. For policy forms 18UD, 18GI, 18UD-F, an 18GI-F, the expected benefit ratio is 60%. The expected benefit ratio is the portion of future premiums that the company expects to return as benefits when averaged over all people with these policy forms.

Retirement Protection Plus is not a pension plan, qualified retirement plan, or qualified individual retirement account or a substitute for one. Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services are offered through PAS, member FINRA, SIPC. 

This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.

Guardian Disability Retirement Plan Protection

By : Steven Crawford

(240) 848-5552

2024-175201 Exp: 5/30/26