Long-term disability insurance can provide critical financial support should an injury or illnesses require you to miss work for an extended period of time. While some employers offer long-term disability as an employment benefit, this is not always the case and people often seek long-term disability coverage on their own. Other times, a person may wish to have additional coverage on top of that offered by his or her employer. In any event, it is important to understand the benefits you are signing up for when you get a long-term disability insurance policy. For instance, you will want to know how much of your salary will actually be covered should you need to access benefits under your long term disability insurance policy.
How Much of Your Salary Is Covered by Long Term Disability Insurance?
The short answer to this is, it depends. More specifically, it depends on the coverage of your policy. The terms of your policy will dictate how much of your salary will be covered under your long term disability insurance. That is why it is important to get long term disability coverage that will provide enough pay out benefits to provide you with the percentage of your salary that you will depend on to get through being out of work due to your disability.
When looking for long term disability insurance coverage, you will need to analyze how much you will need to live on should you be out of work for an extended period of time. The general rule of thumb is that your long-term disability insurance policy should cover anywhere from 60 to 80 percent of your take-home pay. Insurance payments are not taxed like income is so you will not need to account for that.
To get a clearer idea of how much coverage you will really need, make a list of your monthly living expenses. Start with the basics such as food, housing, utilities, etc. Account for the fact that you will likely have some entertainment expenses such as books and movies. You are also likely to have disability-related costs, such as mobility devices (wheelchairs, etc.) and other healthcare costs. If you have a high deductible on your health insurance or your coverage is not great, account for the fact that you are likely to have a significant increase in healthcare-related costs.
Total everything together to arrive at how much you will need to live on should you be out of work on disability leave. Get long term disability coverage that will meet this need. Enjoy the peace of mind that will come with knowing you will have enough insurance coverage in the event that you are unable to work for an extended period of time due to a disabling injury or illness.
Do you have questions about long term disability coverage? Roeschke Law has answers. We are here to support you in any way we can. Contact us today.