How much long-term disability insurance should I have?


Your coverage on a long-term disability policy is called the benefit amount. This is the monthly amount you receive in the event of a disability. The benefit amount is based on a percentage of your current income. Typically this will be in the 60% range of gross (pre-tax) monthly salary. But remember that if you buy your own policy (with after tax dollars), your benefits will not be taxed. So a 60% coverage benefit could be pretty close to your current monthly take-home pay. You should have a disability insurance benefit that's enough to cover your living expenses (rent/mortgage, groceries, utilities, etc.). You may be able to trim your budget during a period of disability, but be aware that you may have additional expenses while you're ill or injured that may not be covered by your health insurance (for example - travel to see medical specialists).