1. Home
  2. Disability
  3. Disability Insurance: How Much Do You Need?

Disability Insurance: How Much Do You Need?

Exploring the amount of disability insurance you might need in the future is essential to your well-being and lifestyle. While no one expects to get hurt and become disabled, it’s better to prepare for this to happen than be caught without any financial resources as a backup to pay your bills.

Why Is It Important to Have Disability Insurance?

Experiencing a disability forces you to stop work abruptly and takes away your financial lifeline. It can happen at any time, even if you’re perfectly healthy. Getting into an auto accident, forming a digestive disorder or experiencing a mental health breakdown can quickly leave you without work or any income.

Making Sure You Have a Financial Backup

Having disability insurance as a backup when you become disabled and can’t continue to work is an excellent way to receive a portion of your income still. It’s typically best if you aim for at least 70 percent of your current salary when you’re seeking long-term disability insurance benefits. You’ll also want to make sure you’re covered for at least six months with a short-term disability insurance plan.

Understanding Your Needs and Requirements

Understanding how much you need each month to maintain your current lifestyle is essential when you are seeking disability insurance. At a minimum, you will want to be able to afford all of your fixed, non-negotiable expenses. Once you’ve determined this baseline, you will also want to consider the costs you’ll need to pay to continue living the same lifestyle you currently have.

Whether you currently have an emergency fund to withstand a short-term crisis, hold an abundant amount of savings or live paycheck to paycheck, acquiring disability insurance may be one of the best moves you can make to protect yourself. Making sure you can financially meet the long-term needs of you and your family is critical.

Won’t I Receive Social Security Disability Insurance Benefits?

Working and paying Social Security taxes help fund the government Social Security retirement plan. It also allows you to receive disability insurance benefits, which come from Social Security Disability Insurance (SSDI). Eligibility for SSDI is based on your age, years you have worked, and the age when you become disabled. You’ll need to meet certain eligibility requirements to receive this payment each month.

SSDI Is Typically Not Enough to Live the Same Lifestyle

The SSDI benefits you get when you’re disabled will likely be much lower than the wages you receive from your job. Trying to maintain a similar lifestyle if you become injured and only receive SSDI is usually extremely difficult. Acquiring long-term disability insurance is critical if you want to help ensure that you continue to collect enough money to live each month comfortably.

Acquiring Disability Insurance Is Crucial

It is essential to acquire disability insurance long before you require it. Receiving and paying for monthly insurance premiums will keep you protected and safeguard you and your family if a disability occurs. Applying for this type of insurance is usually straightforward and is well worth the benefits it provides if you become permanently disabled.

Updated on April 5, 2020

Was this article helpful?

Related Articles

Leave a Comment