Often, the most difficult part of deciding what kind of disability plan to purchase is deciding how much coverage is best for you and your family. There are so many different types and amounts of coverage available that it can be difficult to choose which coverage amount is right for you. The amount you choose will depend on how much income you generate, what type of job you perform, whether you are the sole income provider for your family, and other various factors.

How much insurance you need also depends on whether your employer provides you with disability insurance. The important thing to remember about company-provided insurance is that it is taxable. This is different from insurance that you purchase yourself. Most companies also tend to cap the amount of disability payments that you can receive per month. How much they are capped depends on the amount of your salary. In addition, most companies provide you with only enough coverage for up to 60 percent of your wages. This may not be enough money to take care of your financial responsibilities.

You can purchase plans that cover up to 60 percent of your income and are not taxable. You can also purchase more coverage if you so desire. Some insurance companies sell plans that can cover the amount you would have to pay in taxes for your employer’s coverage, effectively bringing your coverage back up to 60 percent. You can purchase plans that would provide coverage anywhere from two to five years, or until the age at which Social Security payments begin. You can even purchase plans that would cover more or less than 60 percent of your income, depending on whether you wish to pay for a more expensive plan or are willing to risk depending on less coverage.

How much you need truly depends on your own individual situation. If you are the sole income provider, it may be worth paying extra each month on your policy to have more than 60 percent of your income protected. However, if your spouse works as well, you may consider a plan with less extensive coverage, depending upon your combined income.