Insurance tips - Protect your income with long-term disability insurance
Some employers provide it. However, benefits that you receive while disabled usually are taxable income. So, if the benefit is 60 percent of your salary, you will be lucky to yield 45 percent after taxes.
Unless you can live on that 45 percent, contact your employer. Request that the company include the premiums it pays you for long-term disability insurance in your taxable income. By doing this, you will have paid income taxes on the relatively small premiums so that if you become disabled, you can collect those benefits tax-free.
If your employer can't or won't do that for you, buy a supplemental individual policy that will cover at least the income taxes that you will have to pay on your group benefits.
If you don't have coverage at work, talk to a knowledgeable agent to help you qualify for and buy a privately owned long-term disability insurance policy. Because you're buying this policy with after-tax dollars, benefits will always be tax-free to you!
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