Something weird happened when I started to call myself a financial planner… people assumed that I had all my money shit figured out.
I do not.
And I’d rather not pretend that I do, because that takes away my ability to share the lessons that I’m learning with you…. helping us both learn together.
Take this last week when I finally made some progress on a financial weak point of mine: disability insurance.
The problem that requires a solution:
Not having disability insurance is not, in itself, a problem.
It’s just another financial product, but one that was created to help solve a problem that’s a real doozy: what happens if you get injured or so sick that you can’t do your job (or any job)?
What happens if you can’t earn income, but you still need all the things you need now: food, a home, and all that other important stuff?
Well, if it’s only for a few months you might be able to cover it with an emergency fund or a line of credit.
As a variable income earner I have lots of months where I don’t make much income and need to cover it with money I’ve saved.
But what if it’s really bad, and you can’t work for years… or maybe ever again?
That’s a problem that’s very difficult to solve with hard work and a can-do spirit.
Enter longterm disability insurance:
That’s what longterm disability insurance is for.
If you have it, and something big happens, they’ll send you cheques for as long as you can’t work.
It probably won’t be as much as you made before, but it’s tax-free money that can be a real lifesaver if everything goes wrong.
Sounds pretty great right?
Then why is no one talking about it?
The things I’ve always believed about disability insurance:
As a freelance artist I never thought something like this was available to me.
Honestly, I barely knew it existed until I started studying finance, but even after I did… I believed the rumours that floated around the arts business that we were excluded from this kind of product.
And even if I could qualify for something like it, I was sure it would be prohibitively expensive.
I believed that my best bet was hoping that nothing really bad would ever happen.
And because I’m still young and still feel mostly invincible… that isn’t a really hard thing to do. Serious injury and illness happen to people, but mostly they happen to OTHER PEOPLE.
I also believed that it was silly to even think about protecting my income until I had more income to protect.
Any insurance broker would probably laugh me out of the room.
The things I found out about disability insurance:
Sometimes our beliefs come from real stories, and sometimes they’re just based on fear and bullshit.
Yes, it’s hard to qualify for disability insurance when you’re an artist.
Lots of insurance companies have classified us as ‘uninsurable’. Which sucks to hear. They don’t want to put a bet on people who have very little income stability.
No, it’s not impossible.
Lots doesn’t mean all. I’ve found that there is room to get past official policy and have insurance companies consider each individual case. If you can prove that your income has some stability to it, the door to the world of disability insurance could open.
No, it’s not necessarily prohibitively expensive.
What if I told you that you could lock in $1,600 a month in tax free money if you get sick by paying $80 a month?
I’m sure reactions would be mixed.
Maybe some of you feel that’s an insanely high price, and some of you (like me) might see that as an excellent investment in an unsolvable problem.
I could dig into the numbers, but I think the $600,000+ of possible return is less important than realizing the stakes.
Yes, you could end up paying $80 a month until you turn 65 and receiving nothing. I don’t see that as a problem… I see that as an investment in my financial infrastructure. I see the benefits of being able to act knowing that I have something of a safety net if the unthinkable happens.
But it’s still $80, and some people don’t feel they can afford that.
… I’m not sure I can afford not to.
Stay tuned for more thoughts on disability insurance as I learn and navigate it for myself. Tomorrow I’ll talk a little about finding a broker, and what that experience was like.
Rags to Reasonable Community Outreach Coordinator
Emily Nixon is an actor/writer/director/filmmaking Swiss Army Knife. She is also a big money nerd and Community Outreach Coordinator for Rags to Reasonable.
She came to this work after becoming completely fed up with living paycheque-to-paycheque and being too afraid to look in her chequing account. She is passionate about empowering other artists and variable income earners to keep doing what they love and feel confident about their finances.
Email Emily at email@example.com