Welcome to our Disability Insurance Calculator! Find out if you have sufficient disability insurance to cover your needs if you’re unable to work. This disability insurance calculator takes a look at disabilities lasting up to five years. For more information on disability insurance, read our informative article below the calculator!
Do You Have Enough Disability Insurance?
Imagine getting injured, unable to work your job, no longer able to provide for your family. What should you do?
Beyond finding work that you are able to do, your only real hope is disability insurance.
Many employees already have disability insurance through their employer, but don’t assume you have it – ask! And if you don’t have enough coverage, get it!
Here’s what you need to know about disability insurance . . . .
Emergency Funds vs. Disability Insurance
It has been said that those who have an emergency fund don’t really need disability insurance. Is that true?
Consider this: According the Council for Disability Awareness, the duration of the average long-term disability claim lasts over 34 months.
It’s clear that even if you have an emergency fund, you need disability insurance.
Additionally, keep in mind that as you’re working through Phase I: The Foundation Phase, you’ll save up 3 to 6 months of expenses in an emergency fund after you’ve completed four other crucial steps. It could take you a number of months to have a fully-funded emergency fund, and remember, even that probably won’t supply you with adequate coverage for the average disability.
Likelihood of Disability
According to the Council for Disability Awareness, just over 1 in 4 of today’s 20 year-olds will become disabled before they retire. Additionally, accidents are not usually the culprit. Back injuries, heart disease, cancer, and other illnesses cause the majority of long-term absences from work.
As you can see, even if you’re in a low-risk job, you can still become disabled due to non-work related incidents.
Some people have life insurance but no disability insurance, when they are more likely to need disability insurance rather than life insurance. Backwards, isn’t it? Everyone needs both!
Disabilities, Your Income, and Your Expenses
Not only do disabilities stop you from working, but you’ll typically need medical treatments or physical therapy while you’re disabled. In other words, not only does your income drop, your expenses rise – and they do so significantly.
When using the Disability Insurance Calculator, be sure to figure in extra expenses associated with disabilities. While it’s difficult to predict, it’s a good idea to look at your health insurance deductibles and account for the worst-case scenario.
The Disability Insurance Calculator will show you how much disability insurance coverage you’re needing based on this worst-case scenario, ensuring you’re prepared in case of a disability. If you’re married, be sure to account for both yourself and your spouse in the calculations.
When to Purchase Disability Insurance
Okay, so you’re convinced you need disability insurance, but when should you get it?
There are two goals you’ll want to accomplish first in Phase I: The Foundation Phase before you sign up for disability insurance:
1. Create a Budget
Without a budget, overspending is bound to occur. As you’re writing out your budget categories, make sure to include various types of insurance including disability insurance.
You’ll be happy to learn that disability insurance doesn’t cost much. Get a preliminary quote for disability insurance so that you can set your budget accordingly.
2. Save $1,000 Cash
This is to cover very small emergencies, and will especially come in handy when a few unexpected expenses hit your budget. Make sure to store the cash at home, in a safe if you have one.
After you’ve accomplished these goals, it’s time to get appropriate insurance policies. Disability insurance is one of those policies.
How much disability insurance do you have? How much do you need?
Our Disability Insurance Calculator is just the ticket to answer those questions. Turn that knowledge into action, and talk with a Certified Financial Planner™ to discuss other important factors to consider when purchasing disability insurance. You can simply fill out the form below!
More Financial Calculators
For access to our complete suite of financial calculators, ensure you’re a member of Truth in Financial Planning. As a member, you’ll have access to many more financial tools and resources designed to help you improve your finances.
If you’re already a member, access the rest of our financial calculators here.