Agent Owner, Gilmore Insurance Services, Marysville, Washington State
How much disability insurance can you buy? Well, here's a secret that not many people know about. Normally, if you have group insurance and individual disabiliy insurance, it's a combination between the two till you hit 70% of your income. So if your group covers 60% of your income, your individual will top out at 10%.
Now, if you have no group disability in place when you purchase individual, you can get up to 70% in income covered. Then if you join a group plan, the two combine and can push the total well over 100% of your income. So if you know kids finishing college or advanced schooling, get them to consider disability now! before they go to work.
Social Media Strategist, Disability Insurance Services, California
For some people, private disability insurance that covers 60-70% of your income isn't enough to feel financially secure. In those cases, it's recommended that you look into retirement security disability insurance. People forget that when you go out on claim, your contributions to your 401k or other retirement funds are stopped. Retirement DI will continue to pay a benefit to your retirement savings. Also, it's good to look into critical illness insurance for the extra lump sum payout while you're waiting for your individual DI elimination period to pass.
There are several benefit triggers for disability insurance that may impact the level of benefit you can purchase. Most carriers will limit the monthly benefit to a percentage of your monthly gross income. The percentage ranges from 50% to 70%. There will also be a hard dollar cap that may apply to people with higher incomes.
The policy elimination period comes into play most frequently, as most disabilities have a very short duration. Shorter elimination periods often result in more frequent, and larger claims payments.
When purchasing disability insurance the answer depends. Most short term disability plans have a set dollar amount that can be paid daily, weekly or monthly not to exceed 70% of your income. On long term disability plans it is usually up to 70% of your current income. There are plans that have lower maximums. Be sure and shop for the plans up to 70%. The answer to your question is as much as you can afford over the long term up to these amounts.
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Now, if you have no group disability in place when you purchase individual, you can get up to 70% in income covered. Then if you join a group plan, the two combine and can push the total well over 100% of your income. So if you know kids finishing college or advanced schooling, get them to consider disability now! before they go to work.
The policy elimination period comes into play most frequently, as most disabilities have a very short duration. Shorter elimination periods often result in more frequent, and larger claims payments.