Millions of working Americans are facing a growing crisis: a lack of adequate disability insurance coverage. Today, the absence of emergency savings, rising medical costs, and an overall trend of fewer employers offering benefits to workers and has created a critical blind spot for many American workers and their families. Without some kind of income protection, more Americans are experiencing severe financial difficulty if they need to miss work due to illness, injury, or pregnancy.
How do I determine how much disability I need?
Disability insurance prevents injury or illness from becoming a major financial catastrophe. Generally speaking, consider a policy that replaces at least 60 percent of your after-tax income.
To estimate the benefit amount you would need if you became disabled, ask yourself how much monthly income would cover your living expenses. Household expenses may include mortgage and car payments, groceries and child care. Consider all these factors to help you come up with an appropriate amount.
Short Term Disability coverage usually starts anywhere from one to 14 days after an employee suffers a condition that leaves them unable to work. The time of coverage may vary from 9 to 52 weeks from eligibility.
Long-term Disability coverage picks up where short-term disability insurance leaves off. Once the short-term benefits expire (generally after three to six months), long-term disability insurance pays a percentage of your salary, usually 60 percent, depending on the policy. The benefits last until you can go back to work or for the number of years stated in the policy.