How can I determine how much disability insurance I need?
By Jorge Hiram Garcia, Your Insurance Advisor | April 29, 2010
The goal of buying long term disability insurance is to make sure that if a disability occurs, you and your family will have enough financial resources to maintain your family’s lifestyle without having to make drastic changes. You’ll need to make some adjustments of course, but the goals is to ensure that those adjustments do not lead to unnecessary hardship and suffering for you and your family.
Having a disability occur in the family is bad enough, and could be traumatic enough on its own, but the financial consequences leading to the changes in a family’s lifestyle can be even worse. This stress makes having the right amount of coverage and protection very important, and the amount of insurance purchased, a very important question to address.
Married couples should take care to cover the needs addressed by both partners, not just the one bringing home the income. If both partners earn income, then by all means make sure that you take both incomes into consideration when purchasing long term disability insurance. But even if only one partner actually brings in income, does that mean that we can ignore the other non-income producing partner? Not at all. It would be wise to keep in mind that the non-income producing partner still accounts for income-necessary actions such as childcare, home care in case of older dependents, and upkeep and maintenance in the home. These jobs cost money to replace, and thus will affect a family’s lifestyle in case of a disability.
Partners who stay at home account for the cost of labor needed to replace their work. For example, if a homemaker becomes disabled, and cannot take care of young children, a nanny or childcare worker must no be hired. This hiring costs money, and will take time away from the wage earner, or income producer, and that cost must be kept in mind when you purchase long term disability insurance. One thing to keep in mind is that many insurers will not provide this type of coverage so you’ll have to do some careful shopping to make sure that the policy you do buy includes this type of coverage. Learn more about how to buy the right type of long term disability coverage.
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