7. 3 Disability Insurance
Disability Insurance Benefits n Disability insurance – pays a portion of your income if you can’t work due to injury or health conditions n Types of Disability Insurance Short-Term Disability Long-Term Disability • Pays portion of income for 13 -26 weeks, usually • Max amt is paid out • 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 n Usually can be bought thru group plan@ work n Can buy individually, but more $ n 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) n
More Facts: Worker’s comp will cover if injured on the job n Amt you receive depends on n ¨ 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?
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