Calculating Your Disability Income Needs

Few people want to consider the possibility that they may be injured and unable to work because of a resulting disability. Whether a workplace injury, vehicle accident, or mental health situation, being disabled takes a toll on your financial health, as well as your physical health. There are two types of disabilities that can result from an injury: short or long term disability.

The Purpose of Disability Coverage

Under disability insurance, individuals can have a portion of their income replaced if an injury or serious illness has occurred that limits employment. The benefits are paid directly to the individual, without any limitations put on what things the man can be spent on. The policies vary, with some providing 70% of an individual’s income for three months all the way until retirement.

The Differences in Disability Coverage

When comparing short term vs long term disability, the primary difference is the amount of time the benefits are extended. Short term is designed to cover you for a period that extends between three to six months. With long term coverage, you may be eligible for five or more years of coverage. Short term will often cover the biggest percentage of your income, while long term coverage will pay out between 40% to 70% of income over a longer period of time.

To decide what kind of coverage you need, at a minimum, factor your monthly expenses. Make sure the policy will at least cover this portion of your salary if you become disabled.