Why You Should Get More Disability Insurance
Buying extra coverage at work can be a good way to supplement what your employer provides free.
I get disability insurance as a benefit at work. I have a chance to buy extra coverage through my employer during open-enrollment season this fall. Should I buy the extra coverage? --J.M., Alexandria, Va.
First see whether you could pay your bills with your current coverage. Mo Vidwans, a certified financial planner in Saline, Mich., recommends having enough disability insurance to cover 60% to 75% of your monthly expenses. But many employer-paid group disability policies cover 60% or less of pretax income, with a monthly cap of $5,000. Benefits are taxable because the employer pays the premiums.
Buying extra coverage during open enrollment can be a good way to supplement what your employer provides free, says Carol Harnett, president of the Council for Disability Awareness. You may be able to boost benefits to about 70% of your income without the monthly cap. This coverage can cost $250 per year or more, depending on the amount and policy details, says Harnett. Benefits aren’t taxable if you’ve paid premiums with after-tax money.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If your job is very specialized, you may want to get extra coverage on your own. Employer-based coverage typically pays out if you’re unable to work at your specific occupation for two years, and it continues after that only if you can’t do any job that’s reasonable for your qualifications. Outside policies may pay until age 65 if you’re unable to do your specific job.
-
Stocks Chop as the Unemployment Rate Jumps: Stock Market TodayNovember job growth was stronger than expected, but sharp losses in October and a rising unemployment rate are worrying market participants.
-
Should You Renew Your CD?With rate cuts impacting earnings, we examine if now is a wise time to renew CDs.
-
7 Ways to Plan Now to Save on Medicare IRMAA Surcharges LaterUnderstand the critical two-year lookback period and why aggressive planning before you enroll in Medicare is the most effective way to minimize IRMAA.
-
Credit Report Error? They All Mattercredit & debt Don't dismiss a minor error. It could be the sign of something more serious.
-
Insurance for a Learning Driverinsurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
-
529 Plans Aren’t Just for Kids529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
-
When to Transfer Ownership of a Custodial Accountsavings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
When It Pays to Buy Travel Insurance
Travel Investing in travel insurance can help recover some costs when your vacation gets ruined by a natural disaster, medical emergency or other catastrophe.
-
What Travel Insurance Covers When Planes Are Grounded
Travel Your travel insurance might help with some costs if your trip was delayed because of the recent grounding of Boeing 737 Max planes.
-
Ways to Spend Your Flexible Spending Account Money by March 15 Deadline
spending Many workers will be hitting the drugstore in the next few days to use up leftover flexible spending account money from 2018 so they don’t lose it.
