$9\mathrm{.}2$ Valeria and Matias Evaluate Their Disability Income Needs

Valeria and Matias Rivera have been married for $2$ years and have a $1-$year$-$old son. They live in Richmond, Virginia, where Matias works for Software Solutions. He earns $$6,000$ per month, of which he takes home $$4,200.$ Matias and his family are entitled to receive the benefits provided by the company's group health insurance policy. In addition to major medical coverage, the policy provides a monthly disability income benefit amounting to $20$ percent of the employee's average monthly take$-$home pay for the most recent $12$ months prior to incurring the disability. $($Note: Matias' average monthly takehome pay for the most recent year is equal to his current monthly take$-$home pay.$)$ In case of complete disability, Matias would also be eligible for Social Security payments of $$1,200$ per month.

Valeria is also employed. She earns $$1,400$ per month after taxes by working part$-$time at a nearby grocery store. As a part$-$time employee, the store gives her no benefits. Should Matias become disabled, Valeria would continue to work at her part$-$time job. If she became disabled, Social Security would provide monthly income of $$700.$ Valeria and Matias spend $90$ percent of their combined takehome pay to meet their bills and provide for a variety of necessary items. They use the remaining $10$ percent to fulfill their entertainment and savings goals.

Critical Thinking Questions

How much, if any, additional disability income insurance does the Rivera family require to ensure adequate protection against Matias becoming completely disabled? Use Worksheet $9\mathrm{.}2$ to assess his needs.

Does Valeria need any disability income coverage? Explain.

What specific recommendations regarding disability income insurance would you give Valeria and Matias to provide adequate protection for themselves and their child?