Why do I need disability insurance?
All you have to do is answer the question " If I am sick or injured how long can I go without a paycheck?" Where would you get the money to live on if you could not work…savings, loans, family? Unlike life insurance virtually everyone needs disability insurance. The odds are much greater of having a disability of three months or more than of dying before age 65.
Even if your employer provides you with a disability plan you probably need to supplement that coverage with your own policy.
How much disability insurance do I need?
The easy answer is as much as you can afford. Normally you may purchase a policy that provides you with about 65% of your gross pay.
Why that amount? The insurance comes to you tax-free if you pay the premiums after tax. So 65% should be fairly close to your take home pay.
Be careful, if you think you are covered at work, it may be for a lot less than 65%. Most group plans only pay 60% of pay and since the employer pays the premium the benefits are taxable. So you may be getting less than 50% of pay if you become disabled. That is why we recommend a supplement policy if you are covered by your employer's plan.
To help you determine how much disability you need, try our Disability Calculator.
What should I look for in a disability insurance policy?
When buying a policy go for a longer benefit period rather than a shorter elimination period. This will provide you the most benefit in the event of a long-term disability.
Consider the definition of disability. Is it "own-occ" or is it any occupation? Does it provide residual benefits if you are only partially disabled? Does it offset with social security benefits? Is it "non-can" or guaranteed renewable?
As you can see there are many variables to consider when purchasing a disability policy. It may be to your advantage to let one of our associates help you.
For further information on Disability Insurance Contact Us.