The question of what happens in the event of disability or illness is an important issue to address for farm operations. Without proper planning, the farm could come to a standstill, causing severe financial hardship.

If a farmer is not able to work because of illness or disability, they will need to find a way to get the work done, pay the farm expenses and pay personal expenses. An option to cover this risk is disability insurance.

Farmers often ask if disability policies are necessary, or if they will really help. My thought is farming is a risky and labor-intensive business, and these policies help reduce financial risks.

For example, a cattle rancher is moving cattle and is accidently hit by a gate. He crushes his rib and punctures a lung. He is in the hospital for a week and is unable to work for weeks or months. He will need to hire help to replace his work on the ranch, and he will need to cover his personal expenses during this time.

The ranch is able to cover the replacement work to keep it running. However, he does not have reserves to cover his lost income for himself and his family. In this situation, a disability policy could really help.

Another situation may be a younger farmer who is having back pains. He goes to the doctor, and they take a scan of his back. They find that he has a cancerous tumor on his spine. He starts chemotherapy and radiation treatments.

He is unable to run the farm for 18 months. He needs to hire help to run the farm. Disability insurance could make a big difference in replacing his lost income and covering the added operation expenses.

Disability insurance options

There are various types of disability insurance. Some policies cover short-term disability. These usually start paying within a few weeks of the incident causing the inability to work, and they usually make payments for a period of 30, 60 or 90 days depending on the policy.

Other policies are for long-term disability. These usually start to make payments 30, 60 or 90 days after the incident depending on the plan. Long-term disability policies often will work in conjunction with Social Security disability benefits.

The amount of insurance coverage depends on the farmer’s income. The farmer will need to show proof of income to determine their amount of coverage. It is best to talk with an adviser for your specific needs.

Balzarini is an attorney at law with Miller Legal Strategic Planning Centers, P.A. Email your questions and comments to Miller Legal at [email protected].