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When you are considering how much benefit to purchase, ask yourself:
- How much am I eligible for?
- How much benefit do I really need?
The amount of coverage you are eligible to purchase is based on:
- Your income. This can also include any bonus income.
- Group benefits. If you have any group benefits, you are most likely eligible to supplement your coverage.
- Other disability insurance in force.
Insurance companies will not allow you to "over-insure" yourself. You can typically replace between 60-70 percent of your pretax income. Since an individual policy is nontaxable, it nets out around 75-85 percent or your pre-disability income.
- Determine how much income you will have coming in after taxes if you are not able to work. (Examples: spouse's income, rental income, investment income).
- Subtract your monthly expenditures. Include food, home and car maintenance or rent, transportation costs, personal hygiene and health-care expenses, and clothing.
- The net amount will tell you how much benefit you will need each month.
Some occupations will automatically qualify for certain benefit amounts without any financial underwriting:
- Medical Residents: Up to $3500/month benefit including any group benefits.
Medical Residents in their 3rd year or greater or Fellows: $3500/month benefit over and above any group policy
First-year Physicians out of residency: $4500/month benefit
Senior Medical Students: $2100/month benefit
First Year Dentist: $3000/month benefit
Dental Residents: $2500/month benefit
Senior Dental Students: $2100/month benefit
First Year Architect: $2000/month
First Year Attorney: $2000/month
First Year CPA: $3000/month
First Year Degreed Engineer: $2000/month
First Year Optometrist: $2000/month
First Year Pharmacist: $2000/month
First Year Veterinarian: $2000/month
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