Disability Insurance Basics
How much disability insurance do I need?
Most financial advisors recommend disability insurance that replaces 60-70% of your gross income. The 60-70% replacement rate accounts for the fact that disability benefits are typically tax-free (if you pay the premiums). The maximum coverage available is typically 60-70% of your income.
Key Points
- Recommended coverage: 60-70% of gross income
- 60-70% replacement rate: accounts for tax-free benefits
- Maximum coverage available: typically 60-70% of income
- Consider: existing group coverage, Social Security, and other income sources
- An independent agent can help you calculate the right disability insurance amount