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How Much Disability Insurance Coverage Do You Need?
Author: Michael Relvas
Disability insurance is a product that "insures" your ability to earn an income so that if an unexpected illness or injury prevents you from working, you could still have a source of income. What Disability insurance "protects" however, is completely different. Just about everything we own, do and plan for in the future relies on the income we earn and hopefully will continue to earn during our working years. Disability insurance protects our family, our future, and our quality of life. So how does someone determine how much disability insurance they should have? The answer lies in what the person's goals are for their coverage.
As a young professional, it may be difficult to justify contributing enough money in premium to obtain the maximum monthly benefit for which you qualify. It does make sense however to maintain enough insurance to cover your necessary living expenses. There are certain financial obligations in life that most would consider to be a necessity - mortgage/rent, utilities, food, clothing, car payments, insurance payments, loan, credit card payments, etc. This is essentially the bare minimum that a person needs to fulfill their financial obligations of every day life. For a young person that does not have any additional responsibilities, this level of coverage is probably suitable. It prevents premiums from being too costly, but still protects what is most important and needed. In doing this however, policies should include the Guaranteed Increase Option rider, to guarantee that benefits can be increased in the future without medical screening.
As a person ages, the dependency placed on income becomes much greater. Traditionally people will marry and start a family, which creates additional expenses and additional responsibilities. At this point in life, Disability insurance will no longer just protect the necessities, but more importantly, it protects a person's family and their quality of life. Most people would agree that if a disability occurred, they would want for their families to incur the fewest changes possible and continue the same quality of life. Therefore, at this point in life, you should maintain enough Disability coverage to protect these things, which is probably the maximum benefit available.
It is not just important to have Disability insurance because financial experts say you should, it is important that you truly understand what Disability insurance protects in order to make sure you have the appropriate amount. Similar to Life insurance, Disability insurance is a very important and thoughtful coverage to have. It protects your family from incurring a complete financial disaster if you experience an unexpected injury or illness that prevents you from being able to earn an income.
Many people believe that Disability insurance is provided by their employer, state or the Social Security administration. The reality is that each person needs to be responsible for him/herself. Not all employers provide their employees with Disability insurance and the average Social Security disability benefit is a little over $1,000 per month. Even those who are provided coverage through work may be under-insured because of the taxation that benefits incur at time of claim. If you do not already know what type of coverage and how much coverage you have, you should become informed. It is important to make sure your income is insured and your family is protected.
Michael Relvas is an insurance specialist with MR Insurance Consultants, a web-based insurance firm that provides individuals, families and businesses across the US with personalized information, quotes and advice on obtaining Own-Occupation Disability coverage at the best price available. To learn more about the options available for your specific circumstances, call 1-800-817-4522 or Contact us.
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