When Does Coverage End on a Group Life Insurance Policy?

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 continues working but the master contract is terminated, he generally has thirty-one days in which to apply for a converted…

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Do Any Disability Income Insurance Companies Offer Temporary Disability Insurance as is Common With Life Insurance?

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 into long-term permanent policies), the risks to the insurer can be high, but manageable and predictable, with the potential for…

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What is Disability Buy-Out Insurance?

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 require the businesses and the key employee-owners to meet stringent business, financial, and personal standards before they will permit a…

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How is a Disability Income Benefit Received Under a Life Insurance Policy Treated for Income Tax Purposes?

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 personal injury or sickness. Visit our articles archive here. View the latest policies that Lifequotes has to offer. Reproduced with permission. …

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Are Disability Income Benefit Payments Subject to Income Tax Withholding?

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 tax rules require no withholding of income tax. Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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Are Personal Disability Income Insurance Payments Paid With Pre- or Post-Tax Dollars?

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 small tax savings could become expensive in the event of disability, since all disability benefits that the employee receives will…

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Are Disability Income Benefit Payments Subject to FICA and FUTA Tax?

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. However, if the employees contributed to the plans that pay the benefit payments, the portion of such payments attributable to…

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What is the “Regular Care and Attendance of a Physician” Requirement Within Disability Income Insurance?

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 permission.  Copyright The National Underwriter Co. Division of ALM

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What Definition of Disability Does the Government use to Determine One’s Eligibility for Disability Benefits Under Social Security?

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 difficult definition to meet because it requires that disabled individuals be so severely disabled that they not only be unable…

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Alternatives to Buying Disability Income Insurance

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 possibility that an individual will become disabled and unable to work. Any financing vehicle that allows individuals to withdraw funds…

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