What are the three factors that contribute to the coverage needed for against temporary loss of income?

The correct answer highlights three critical components essential for evaluating the coverage needed against temporary loss of income, particularly in the context of disability insurance.

Firstly, earned income is a primary factor as it reflects the income a person has been deriving from employment or self-employment prior to a loss. Understanding one's earned income level helps in determining the amount of coverage necessary to maintain financial stability in the event of an unexpected loss due to disability.

Secondly, identifying the availability of other sources of disability benefits is crucial. This includes any income that may come from government programs, employer-sponsored disability plans, or private insurance. Knowing what additional assistance is available can help to more accurately calculate the gap that the individual needs to cover to ensure that their financial obligations can still be met during a period of income loss.

Lastly, understanding the applicable tax bracket is important too. Since disability benefits can be taxed differently than regular earned income, knowing the tax implications can influence how much net income will actually be available during a period of temporary loss. This understanding allows for a clearer picture of the individual's financial needs and helps in adjusting coverage appropriately so that they are fully covered after taxes.

Together, these three factors—earned income, available disability benefits, and the tax implications—form a comprehensive framework