Can Group, Private Disability Policies Work Together?
According to the Social Security Administration, a 20-year-old has more than a 25% chance of becoming disabled before reaching retirement age.1
Loss of income for such a duration has the potential to cause significant financial hardship. And while Social Security Disability 大发888dafa may help, it’s critical to understand that about two-thirds of initial applications are denied and the average SSDI payment is only $1,每月534英镑.2,3
Disability coverage may be available through your employer, who may pay all or a portion of the cost for your coverage.
Employer plans typically pay up to 50% to 60% of your income. This limited coverage might not be enough to meet your bills, which is why you may want to supplement employer-based coverage with a personal policy. Supplemental policies may be purchased to cover up to about 70% of your income.4
Taxation of Disability 好处
When you purchase a personal disability policy, the benefit payments are structured to be income tax-free. 因此, you may not be eligible for coverage that equals your current salary since your take-home pay is always less.
If your employer paid for your coverage, then the income you receive generally will be taxable. If you paid for a portion of the employer-provided coverage, then the pro rata amount of the benefits you receive are structured to be tax-free.
Choices, Choices, Choices
Consider the waiting period before disability payments begin. A longer waiting period saves you money, but it also means that you may have to live off your savings for a longer period. You are the best judge of how much of this risk you are comfortable assuming.
You also may want to coordinate the waiting period with any short-term disability benefits you could have. 例如, if your short-term disability covers you for 90 days, look to have at least a 90-day waiting period so that you can potentially lower the cost of the long-term policy.
Ask how a policy defines an inability to work. Some policies will say “the inability to do any job or task;” others will say “own occupation.” You may prefer the latter definition so you’re not forced to perform some less-skilled, 工资较低的工作. That type of work may not help you meet your bills.
1. Social Security Administration, 2024
2. Disability-好处-Help.org, 2024
3. SSA.政府,2024
4. Investopedia.2023年7月23日
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