When Does Coverage End on a Group Life Insurance Policy?
When an employee is terminated or retires, a legal right (subject to certain conditions) called a conversion privilege comes into play. This conversion privilege allows the employee to convert what was group term life insurance into individual protection through the issuance of a personal contract. When an employee quits or is fired or the employee […]
Do Any Disability Income Insurance Companies Offer Temporary Disability Insurance as is Common With Life Insurance?
The authors are not aware of any companies that offer temporary disability insurance. Upon reflection, at least one reason such insurance plans are rare or nonexistent seems pretty obvious. With health insurance coverage, such as when people are between jobs, or even one-year or other shorter-term life insurance policies (which are typically renewable and convertible […]
What is Disability Buy-Out Insurance?
Disability buy-out insurance is designed to provide coverage funds to buy out the disabled individual’s interest in a business upon the total and permanent disability of a shareholder or partner. Because of the many factors involved as well as the increased potential for adverse selection and moral hazard, insurers underwrite these policies very tightly and […]
How is a Disability Income Benefit Received Under a Life Insurance Policy Treated for Income Tax Purposes?
When policyowners receive disability income benefits under a disability rider attached to a life insurance policy, the tax rules treat the amounts as a separate accident or health benefits and not as proceeds from the life insurance policy. Thus, such benefit payments are excludable from income as “amounts received through accident or health insurance… for […]
Are Disability Income Benefit Payments Subject to Income Tax Withholding?
While the tax laws generally require employers to withhold income tax from disability income benefit payments, the tax rules do not require withholding on benefit payment amounts that the employees can excluded from their income. Further, if an insurance company or other entity under an accident or health plan makes the disability benefit payments, the […]
Are Personal Disability Income Insurance Payments Paid With Pre- or Post-Tax Dollars?
Most often, disability plans that require employee contributions be paid with post-tax employee dollars. If so, benefit payments are free of any tax liability. Some plans are paid with employees’ pretax dollars through Section 125 plans. By paying premiums with pretax money, the employee’s income is reduced, so they pay fewer taxes. However, this relatively […]
Are Disability Income Benefit Payments Subject to FICA and FUTA Tax?
Payments made to disabled employees by either an employer or an insurer are subject to social security tax (FICA) and federal unemployment tax (FUTA) for the first six months after the last month in which the employees worked for their employers. After six months, such payments are exempt from social security and federal unemployment tax. […]
What is the “Regular Care and Attendance of a Physician” Requirement Within Disability Income Insurance?
Generally, an element of meeting the definition of disability under a disability income policy is that the insured person must be under the care of a qualified physician in order to continue to receive disability income benefit payments. View more of our articles here. To see the policies that Lifequotes offers, visit here. Reproduced with […]
What Definition of Disability Does the Government use to Determine One’s Eligibility for Disability Benefits Under Social Security?
Disability for Social Security purposes is defined as the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a period of at least twelve months or longer. This is a fairly […]
Alternatives to Buying Disability Income Insurance
Alternatives to disability income coverage include self-insuring against the possibility of a disability, purchasing a life insurance policy with a waiver of premium benefit or rider, purchasing critical illness insurance, and being able to qualify to receive Social Security disability income payments. The only real alternative to disability income coverage is to self-insure against the […]