The interviews are over. You’ve managed to make it through the gauntlet and emerge on the other side, ready to claim that new job.
All that remains is for them to make the offer and you to accept.
“We are pleased to be able to make you a job offer to become part of the Acme team,” the HR guy says.
“We have two compensation packages we can offer you. You just need to tell us which one you will accept, and the job is yours.”
You try to keep that smile off your face…two compensation packages to choose from? Who gets two comp packages? Me! Mr Big Shot, that’s who! Wait…keep that smile off your face. Focus. Focus.
“Compensation package A comes with an annual salary of $75,000…”
Your toes curl and your eyebrows involuntarily shoot up. $75,000? Sweet!
“…and that’s it. Now, keep in mind that there is a 1 in 4 chance of becoming disabled. So, in order to address that, we can also offer you a $73,000 salary and if you ever do get disabled, we would pay you $49,500 tax free.”
Suddenly, your head is spinning.
This job carries with it a 1 in 4 chance of getting disabled?
“Why is this job so dangerous?” you ask.
“Oh, it isn’t that this particular job is dangerous,” the HR guy responds calmly. “The 1 in 4 stat is from the Social Security Administration. It’s not just this job that has a 1 in 4 chance of being disabled. That’s everybody’s chance.”
In fact, according to Social Security’s website, “Disability is something many Americans, especially younger people, think can only affect the lives of other people. Tragically, thousands of young people are seriously injured or killed, often as the result of traumatic events. Many serious medical conditions, such as cancer or mental illness, can affect the young as well as the elderly.”
“The sobering fact for 20-year-olds is that more than 1-in-4 of them becomes disabled before reaching retirement age.”
So back to the job offer.
Comp plan A offers $75,000 if you are healthy and working, but $0 if you become disabled and cannot work.
Comp plan B offers 73,000 if you are healthy and working, but $49,500 tax free if you become disabled and cannot work.
The truth is that comp plan B roughly describes what many young professionals could accomplish simply by acquiring the right kind of disability insurance. It would cost them a portion of their income each year, but considering the value and the necessity of that income, does it really make sense to leave it unprotected…uninsured?
Which job would you chose?
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