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$37,000 per year. Because Bob will be missing six months from work, he will lose out on $42,500. His one week’s worth of pay from his sick days will give him a gross paycheck of $1634.62. Where is Bob going to come up with money to help pay for his regular cost of living, not to mention his medical bills?

Bob’s salary

= $85,000

Bob’s missed salary = $42,500

Bob’s sick pay

= $1,634.42

Amount needed

= $40,865.38

(All amounts are in before tax dollars.)

For starters, Bob’s health insurance will pay for some, and per- haps most, of his medical bills. Plus, his wife works and her income will not be affected by Bob’s accident. But he is the main breadwin- ner in the family, and his income has been effectively shut down for at least 6 months. This means that Bob is going to have to use some of his nonqualified savings to help pay for his lifestyle. Even if Bob’s and his wife’s lifestyle isn’t that expensive, it’s safe to assume that they will deplete a good portion of their savings because they have no form of DI. Bob will not be able to qualify for social security dis- ability benefits because although he will be off work for more than 5 months, he doesn’t meet the rule that says he needs to be disabled for at least 12 months. Plus, he has to be unable to work at any job, and, chances are, Bob would be able to find employment somewhere even though his legs are broken.

So, if Bob and his wife take out $50,000 from their nonqualified account to help cover bills and other expenses, they will then be left with $150,000 left in that account. That’s still good, but what if they need more money? It will have to come out of the same account, thus continuing to deplete the account. Plus, they will probably have to pay some form of capital gains tax on whatever they pull out, if they haven’t done so already. Then, not only will they miss out on the growth of that $50,000 (or more), but they will also want to repay themselves, which may put a strain on their income after Bob returns to work.

Had Bob had some form of DI, he would have been able to retain some of his income while he wasn’t able to work. He and his wife

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