How much DI do I need?

[Oakland11]

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ive read through several threads and white coat investor but wanted to ask how much disability insurance should I get?
Finishing up fellowship in a procedural specialty. Working as a independent contractor with a salary of 300 k and income potential to 5-6 in theory I guess. Will not have any disability benefits through the hospital system I assume.
I currently have a DI with guardian and was told the max is 15-17k per month so I will do that once I become an attending. But my DI guy thinks I need to get a second insurer in the range of 4-5k now. I was also told DI can have high rates in California where we live.

How much estimated should I get? Is it common place to have 2 policies? Would they both kick in if one becomes disabled? Also don't want to be over insured as it feels like most of my money goes to all this stuff at time. We are a family of 4 with a lot of loans ourselves. I appreciate any thoughts on this.

 

[TexasPhysician]

I think it depends more on your family's spending habits. My family is relatively frugal. As my policy pays in tax free dollars, I'm never going to even pay for 17k/month. I have a family of 4 as well. Keep in mind that if you are disabled then your costs would be lower to. No commuting to work, no work clothes, less eating out, etc.

 

[The White Coat Investor]

It's about your expenses, not your income, but give yourself some room to grow.

Two policies are fine. They'll both pay (read the fine print to make sure.) But realize you may not need as much as you think because disability insurance payouts are generally tax-free and they go to age 65-67. So a benefit of $17K a month is $204K a year. Seems like plenty to me (and that's about what I carry despite a higher income than yours). But if you would like another $60K, then buy it. I think $264K tax-free for someone with a salary of $300K is overinsured.

 

[Smart Money MD]

On the flip side, I have a policy that I bought in fellowship. Only insured for $7/month. My income is a little more than half of OP's right now. Last I checked (a year ago) my insurance agent wasn't interested in increasing my policy without significantly increasing my premium.

 

[Oakland11]

Thanks a lot for the help. I decided that for me I don't need as much DI as I thought- gonna end up around 13-14 k. But adding a pretty small second policy with option to grow in the future without being retested is a reasonable option.

 

[QofQuimica]

As others have already said, it's your spending needs that matter, not your current income. I only have $5000/month for my individual DI, but my monthly expenses as a single person in a low COL state are only half that amount. (Plus I also have group DI through my employer). Once I reach the point of financial independence (where I could afford to stop working altogether if I chose), I will drop the individual DI plan, since I will no longer need to protect my ability to earn a future income or save for retirement.