Second, re: budgeting, for real you ought to look at Mint or Yodlee. There are security concerns, but I have gotten comfortable with them. I have used Yodlee for about a year and a half now, and it is the single most useful financial tool you’ll ever find. Bet.

So we’ve got our example stud invested in what here? 90% cash, 10% insurance?

I think you misunderstood me when I said my post was speaking from experience didn’t mean that didn’t advocate disability insurance. I just haven’t experienced anybody that has gone through that therefore why it wasn’t mentioned.

Last year, my wife and I decided to take out a small disability policy. Partly, since I am a business owner and I have a tangible asset I could sell if I had to if I were disabled. We decided to go with a policy that would cover our house payment plus taxes. For the average Joe, that is not enough, but better than nothing.

The facts you mentioned are spot on and that’s what I typically share with folks (maybe not quite as detailed as you). Thanks for the insight. Good stuff. Very “studly”.

You can have the greatest financial plan in the world, but if you require income to make that plan go and you become too sick or injured to continue to show up for work and collect a paycheck it all falls apart as income is the basis/ foundation for everything financial. A financial plan with no income protection is like a circus act without a net.

If you are 30 years old with an income of $100k, that means your ability to work is worth $3.5Million if you retire at 65, assuming zero raises. Do most 30 year olds have anything worth that? Why not insure your greatest asset?

My point is that when managing risk one should play the numbers to determine what type of coverage is most important and most Americans are underinsured (even if they have coverage at work) for the greatest risk they will ever face:

Over 51 million Americans are classified as disabled, representing 18 percent of the population.
U.S. Census Bureau, Public Information Office, November 2008

In the U.S., a disabling injury occurs every 1 second, a fatal injury occurs every 4 minutes.
National Safety Council, Injury Facts 2008 Ed.

One in 7 workers can expect to be disabled for five years or more before retirement.
“Commissioners Disability Table, 1998,” Health Insurance Association of America, the New York Times, February 2000

Long-term disabilities are primarily caused by illnesses such as cancer, heart disease and diabetes. According to the Centers for Disease Control and Prevention, these diseases cause major limitations in daily living for more than 25 million Americans (70% are caused by illness vs. injury).