Comments on: Personal Finance Basics: Long Term Disability Insurance

By: John Hunter

John Hunter — Fri, 02 Nov 2012 12:42:22 +0000

Disability insurance payments should be of your gross pay (not net pay) – you should always check the policy to understand exactly what the rules are for that policy).

By: Marc

Marc — Thu, 01 Nov 2012 16:29:57 +0000

Is the 50% or 60% of your salary that DI would pay be 50/60% of one’s GROSS salary or one’s take home salary (take-home being equal to gross minus applicable taxes)?

By: USA Social Security Disability Insurance at Curious Cat Economics and Investing Blog

Sun, 15 Jul 2012 21:58:32 +0000

Studies show that a 20 year old has a 30% chance of becoming disabled before reaching retirement age…

By: Disability Insurance is Very Important at Curious Cat Investing and Economics Blog

Sun, 16 Oct 2011 13:16:31 +0000

[...] believe long term disability insurance is a must for a safe personal financial plan. The risk of not being covered isn’t worth it. An office [...]

By: Justin skelton

Justin skelton — Mon, 02 May 2011 01:36:50 +0000

Income from disability insurance provided from your employer is fully taxable as income because your company paid the premiums and those premiums were tax deductible. Earning $100k with 60% DI will get you $60k. After tax, you will net ~$45k (assumed 25% tax bracket). It’s a good idea to purchase private insurance, paying you own premiums can potentially net you ~$70k after tax.

By: Anonymous

Anonymous — Fri, 29 Apr 2011 04:11:08 +0000

Thanks for the food for thought. This will be the next project for my spouse and me to work on. Within the year, my husband and I did all the leg work on our life insurance policy and got an amount that exceeded what we were initially offered on account of the medical issues of one of our children.

By: John Hunter

John Hunter — Thu, 21 Apr 2011 17:58:05 +0000

I believe if you paid your premiums with after tax dollars then it is not taxed. I am not sure, but I have read that. I am not sure how you pay premiums with pre-tax dollars but maybe that can be done through your employer.

One thing to remember is you don’t pay social security tax on the benefits and I wouldn’t think medicare taxes either. Again, I am not sure but that is my understanding.

By: Kevin

Kevin — Thu, 21 Apr 2011 14:26:23 +0000

I’m pretty sure long term disability isn’t taxed either, which should make the 60 or 70 percent pretty comparable to your 100% salary that is taxed. I’m trying to think back to my personal finance class in college, so I could be wrong about this.