CALCULATING YOUR
DISABILITY INSURANCE NEEDS
Working it out
The three worksheets can help you calculate how much disability insurance is right
for you. The first worksheet (A) helps you calculate what your income needs would
be in the event of a disability. The second and third worksheets (B and C) help you
determine what financial resources you would have available.
A. What you need: Add up your cost of living and see how far you're willing to
cut back if you became disabled from an illness or injury. In the first column, list
your current monthly expenses (for annual expenses, divide by 12). Then, list
your expenses if you became disabled. If you spend a lot for clothes, commuting
and lunch, you might think your expenses would be lower if you can't work - but
maybe not. You may need special care, medical equipment or even home
renovations.
B. What you have: This worksheet will help you determine the sources of income
you could draw on in the event of a disability. List your current coverage. Be
aware that when more than one plan applies, benefits are usually coordinated
and capped at 85 per cent or less of your normal earnings.
C. Is there other money you could draw on?
TIP: the bottom line
How does your coverage compare to your expenses?
Discuss your disability insurance needs with a professional for sound advice.
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