7.3 Disability Insurance

Disability Insurance Benefits Disability insurance – pays a portion of your income if you can’t work due to injury or health conditions Types of Disability Insurance Short-Term Disability Pays portion of income for weeks, usually Max amt is paid out Long-Term Disability Covers you for several years, or until retirement Higher premium

Facts: Some people choose to buy an accident policy or rely on savings instead of buying short-term disability Usually can be bought thru group work Can buy individually, but more $ If your job is covered by Social Security, may get disability covered by fed gov’t (annual statement shows how much you’re eligible to receive)

More Facts: Worker’s comp will cover if injured on the job Amt you receive depends on  Partial or total disabled  How long you’ve worked  Wages & % of those wages  May be reduced by S.S. and/or worker’s comp

Example 1 Phil Kustin injures himself in an accident and can no longer work. His disability policy will pay 60% of his average annual wages for the last 3 years. His wages were $28,500, $29,070, and $29,940. What is Phil’s monthly disability benefit?

Example 2 Kelly O’Hara is injured & is covered by a group disability policy and by S.S. disability insurance. Her group policy pays 45% of her avg wages for the last 4 years, less any other disability benefits she receives from other policies. S.S. disability will pay her $225 a month. If her wages for the last 4 years were $34,600, $34,900 and $42,000, what is the total amt Kelly will receive a month from her group policy?

Wrap It Up