By: John P. Napolitano, CFP®, CPA, PFS, MST

Many people spend a lot of time planning and worrying about what may happen to their stakeholders if they pass away pre-maturely.

Stakeholders for purposes of this discussion are considered loved ones such as a spouse, partner, children and family, your fellow shareholders of the business or the clients of your business for whom you’ve grown to personally care about. Few people, however, invest as much time planning for their incapacity, or inability to generate income or serve customers.

In fact, the onset of a disability lasting more than 90 days is more likely to occur than you dying.

Sometimes considered worse than passing prematurely, a complete disability leaves you without the ability to earn a living along with the need to pay for your basic living expenses. Add to that any additional medical burdens because of your disability and it gets ugly rather quickly.

Statistics from the insurance industry are not that positive. It appears as if a large number of Americans are not properly insured against the devastating effects of a long term disability. Here are some steps that you may take to determine if you or your children are properly protected.

First, know what needs protection. It’s wrong to assume that you need X% of your current income in the event of a disability. You need to determine that amount based upon your cost of living, additional costs due to your medical condition and your accumulations needs. Accumulation needs include items like college education, retirement or large purchases like roofs or automobiles. 

Next evaluate your current coverage. Don’t assume that your disability coverage from work is adequate. Group disability plans come in all shapes and sizes and the criteria for determining if your group plan will do the job for you is frequently hidden deep in the details of the group policy. The material moving parts are the definition of disability, the computation of benefits and any possible caps or exclusions and the duration of benefits. Some group plans have additional riders such as spousal coverage or life insurance riders. These too need to be evaluated on an individual basis, as some are effective and others are not.

Riders are additional guarantee options that are available to a disability or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. Also, take into consideration that group policies paid for by your employer will cause the benefits received to be income taxable. Be sure to factor that into the net spendable benefit that you’ll receive.

For those with an individual disability policy, it too needs examination. Unless you’ve recently acquired this coverage, it’s common to forget the fine details of your coverage. An independent review should highlight the strengths and weaknesses of your individual plan.

The last part is to create a plan that protects you and your stakeholders against adverse consequences caused by your total disability. The plan should include a continuity plan for the services you provide for your business and your family, and an evaluation of any insurance options available to you.


John P. Napolitano CFP®, CPA is CEO of US Wealth Management in Braintree, MA. Visit JohnPNapolitano on LinkedIn or The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.

While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. Guarantees are based on the claims paying ability of the issuing insurance company.

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