How Much Disability Insurance Do You Need?

  1. 12689 POINTS
    Ted Ratliff
    Owner, SFS Associates,
    There are guidelines as to how much disability insurance a person can purchase.  Generally between 60 and 80% of earned income.  I would purchase the maximum allowable.  To keep the premium down you can use longer elimination periods.  Determine how long you can function without the income and then purchase a policy that doesn't start until the end of that period.  For example, if you have enough liquid savings to pay 30 days of bills, then select a 30 day elimination period.  An elimination period acts as a deductible.
    Answered on May 24, 2013
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    David RacichPRO
    Fountain Hills, Arizona
    Disability insurance is paycheck protection, but it can also cover retirement contributions. In general terms disability benefits can generate 60% of your earned income tax free or if your company pays for it and deducts, generate 80% of your income, but it’s taxable. Then in addition to protecting your earnings, you can cover your annual contributions to your qualified retirement plan. And you should.
     
    Answered on May 24, 2013
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    Larry GilmorePRO
    Agent Owner, Gilmore Insurance Services, Marysville, Washington State
    How much disability insurance do you need? Well, the answer will vary depending on the individual and what they have asset and investment wise and how willing they are to liquidate those assets. As far as how much or how long or how soon is a function of looking at your situation and finding something that works for you.
    Answered on October 18, 2015
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