How Much Disability Insurance Do I Need?
When considering whether to buy disability insurance (DI), the first consideration is how much
insurance will cover your needs. Except in the case of students on the verge of graduating into high-income careers, insurers will not cover more than a large fraction of your income, often 70%.
While insurers base their coverage offers on income, you need to consider other factors when deciding the level of disability benefits that are right for you. What expenses are impossible for you to cut back? What about student or mortgage debt? In the event of a true long-term disability, how prepared are you for retirement?
Another important factor to consider is the likelihood of living expenses increasing considerably in the event of a disability. Of the disabilities that last longer than x years, y percent increase living costs by z. For many disabilities, the chart below is a helpful visualization.
Deciding on appropriate disability insurance is an almost impossible decision to make alone. As you consider the factors mentioned here, make sure you are familiar with your household’s ability to survive a serious disability. Depending on your situation, different types of disability insurance could be better fits for you, so be sure to consider your options and ask us for a fully-explained recommendation.Source: www.mybpginc.com