Disability Insurance Basics
How much disability insurance do I need?
Most disability insurance experts recommend coverage that replaces 60-70% of your pre-disability income. This accounts for the fact that disability benefits are typically tax-free (if you pay the premium with after-tax dollars), so 60-70% of gross income is roughly equivalent to your after-tax take-home pay.
Key Points
- Recommended coverage: 60-70% of pre-disability income
- Accounts for tax-free benefits (if you pay premium with after-tax dollars)
- 60-70% of gross income = roughly equivalent to after-tax take-home pay
- Consider existing group disability coverage when calculating your need
- An independent agent can help you calculate your income replacement need