Addition by Subtraction
2019 was a great year for portfolio returns. But I'll remember it more for the year that I shored up one of the biggest vulnerabilities of my own financial plan.
I was quick to put a few term life insurance policies into place upon getting married and having kids. But, I've procrastinated implementing an individual disability insurance policy. One, it's expensive. Two, I already had some disability coverage in place through my employer. Lastly, these types of things never happen to YOU, right?
However, the numbers say otherwise. From the Social Security Administration:
"The sobering fact for 20-year-olds is that more than 1-in-4 of them becomes disabled before reaching retirement age."
Many times (as in my case) any disability benefit from Social Security and an employer would not cover someone's burn rate. So I recently decided to allocate ~ 2% of my earnings towards a premium on an individual disability insurance policy that should protect our family for the next 35 years should I miss extended periods of work due to a disability or sickness. There's a valid contingency plan in place should life not pan out the way we intended it to.
So yes, we're a few more bucks out of pocket. But I've protected a far larger financial asset - my future earnings. No bull market in history could replicate that.
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