What is Supplemental Disability Income Insurance and Who Needs It?

What is Supplemental Disability Income Insurance and Who Needs It?

Group long-term disability insurance typically covers around 60 percent of base salary to a monthly maximum benefit of $5,000 or $10,000. The actual policy definitions typically are more restrictive than the definitions in an individual disability insurance plan, and if the employees’ company is making the premium payments for the employees, then the benefits are […]

What is Short Term Disability Income Insurance and Who Needs It?

What is Short Term Disability Income Insurance and Who Needs It?

Short-term disability insurance generally is an employer-sponsored group plan. It pays a specified percentage of disabled employees’ salaries for a specified amount of time if they become ill or injured and cannot perform the duties of their job. Benefit payments usually commence anywhere from one to fourteen days after employees suffer a condition that leaves […]

4 Common Riders Found in Disability Income Insurance Policies

4 Common Riders Found in Disability Income Insurance Policies

As with life insurance policies, disability income policies may offer additional and optional benefits that owner-insureds can add to their base policies by purchasing riders. Waiver of premium – The waiver of premium provision or rider allows policyholders to stop paying premiums once they begin to receive disability income benefits. Thus, the policy will continue […]

3 Ways of Renewing a Disability Income Insurance Policy

3 Ways of Renewing a Disability Income Insurance Policy

The renewability feature of a disability income policy dictates whether and at what premium rate the owner may renew the policy. This policy feature is important because the choice among the renewability provision involves critical cost-benefit tradeoffs. The three principal renewability provisions include: noncancelable; guaranteed renewable; and conditionally renewable. Noncancelable – A noncancelable renewability provision […]

Advice on Determining the Amount of Disability Income Insurance to Buy

Advice on Determining the Amount of Disability Income Insurance to Buy

The benefit amount of a disability income policy is the amount of the benefit that insured individuals will receive each month in the event they become disabled. In arriving at the benefit amount needed, potential purchasers must determine and factor in the other sources of income that they reasonably may expect to have available during […]

What is the “Elimination Period” Within Disability Income Insurance?

What is the “Elimination Period” within Disability Income Insurance?

The elimination period (or waiting period) is the period of time after disability begins until the disability income policy begins paying disability benefits. An individual disability income policy typically will offer the purchaser a choice of several elimination periods at the time the policy is purchased. And, as might be expected, the longer is the […]

Key Things to Know About the Benefit Period in Disability Income Insurance

Key Things to Know about the Benefit Period in Disability Income Insurance

The benefit period for a disability income policy, as with long-term care insurance, is the period of time over which the insurer will make benefit payments. The insurer will pay disability income benefits for the length of the benefit period that the owner selects when purchasing the policy, assuming the disability continues for this entire […]

Standard Provisions and Definitions Used with Disability Income Insurance

Standard Provisions and Definitions Used with Disability Income Insurance

How the policy defines disability is a critical element of the coverage. Whether an individual policyholder will receive benefit payments is closely linked to this definition. Generally, disability income policies define disability in three ways: total disability, partial disability, and residual disability. Total disability – The broadest definition of total disability is centered on the […]

4 Important Tax Implications of Disability Income Insurance

4 Important Tax Implications of Disability Income Insurance

Disability income policies offer some income tax advantages. In summary, although individuals who pay premiums for individually-owned disability income policies generally may not deduct the premium payments from income for income tax purposes, disability income benefit payments received from personally-purchased policies are exempt from income taxation. 1. Disability Income Premium Payments Generally, premiums paid by […]

Business Uses of Disability Income Insurance

Business Uses of Disability Income Insurance

Group disability income insurance coverage is a fairly typical benefit provided to employees by large and medium size employers as part of the benefits package. It is probably accurate to say that this is a benefit employees expect from employers, with the possible exception of smaller businesses. While employees may expect a disability income benefit, […]