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Disability Insurance > Articles > Disability Insurance 101 > Retirement Plan Protection

Retirement Plan Protection

happy couple bikingWe are all living longer and do not have the luxury of a big business providing a fat pension for us when we retire. So, we must all save for retirement on our own (sometimes your company may help by matching your contributions, or by providing a small pension at retirement). Another possible retirement option is Social Security- but will that really be there for you when you need it? As we are working, and earning money, we can shave off some of that to go into an account for use during our retirement years. What would happen to that funding if you were to become disabled and your income stopped coming in? 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, 40, 47- who knows?), but most everyone will not have saved enough to retire at that young age. Most individuals have an age in mind when they expect to retire. I plan to retire by the age of 62; everything I do is part of a plan for me to retire at age 62. What would happen if I had to retire today due to a disability? My retirement dreams would be shattered! This is not something most people will accept as a possibility, but it happens all too frequently. If you do not put a plan into action, a disability could financially devastate you, your family, and any hope for a happy and financially stable retirement.

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.

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 totake the funds over a period of time to allow for further tax-deferred growth.

Please see an example of how a retirement plan may fare with and without an interruption of benefits below:



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


A long term disability, if not protected by a strong disability insurance policy and a retirement protection plan, can turn into instant retirement. Many people today rely on their employers to provide the 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 18GIF,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. James Fegan, Financial Representative of Guardian. PAS is an indirect, wholly
owned subsidiary of Guardian. Financial Balance Group is not an affiliate or subsidiary of PAS or Guardian.

Exp.date 2018-5236 Exp 01/20