How much disability insurance coverage do I need?
By Jorge Hiram Garcia, Your Insurance Advisor | May 1, 2010
In a recent post about disability insurance coverage, we discussed how to determine what amount of disability insurance to buy? Today, we’ll take a look at a quick and easy method to estimate the amount of money needed (as an amount of disability insurance coverage) as accurately as possible.
The most effective and accurate way to estimate your disability insurance needs is to look at your last three months of expenses (use your checkbook register or online statement feature from your bank, if you have that option available) and take the total amount of expenses for each month. Add those three figures up and divide by three to come up with a monthly average amount. Make sure that you do not use a month that includes vacations or other unusual expenses. Pick three average months to use in your calculations.
The resulting amount is a sufficiently accurate estimate of how much money you and your family will need to live on, and will need to replace, or account for, with your disability insurance coverage.
In the next article, we’ll take a look at what are some key terms that you’ll need to know and understand as you shop for disability insurance coverage to make sure you buy the best possible policy to meet your, and your family’s needs. In the meantime, learn more about how affordable disability insurance can be.
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