The above example assumes an effective tax rate of 25% and a Group LTD plan paid for by the employer that provides up to $5,000 per month.
1 Kiplinger. What are the odds the IRS will audit your tax return? And what should you do if it is? June 3, 2016.
2 U.S. Department of Justice. Victims of Identity Theft, 2016.
3 Social Security Administration. Fact Sheet, 2019.
Fortunately, unemployment is rarely permanent, and unemployment insurance can provide temporary assistance.
The chance of becoming handicapped before the age of 67 is 1 in 4 (2) for today’s twenty-year-olds.
Not an accident or injury, but a disease is the most prevalent cause of incapacity (3).
Musculoskeletal/connective tissue illnesses (such as severe arthritis) and mental health disorders are the two leading causes of disability claims.
2 U.S. Social Security Administration, Fact Sheet, December 2019.
3 Integrated Benefits Institute, Health and Productivity Benchmarking, 2017 Long Term Disability, September 11, 2018.
4 Social Security Administration, Annual Statistical Report on the Social Security Disability Insurance Program, 2018.
If you become disabled and are unable to work or generate an income for a lengthy period of time, there are a few income replacement options accessible to you.
Each of these revenue streams has limits, and it is critical that you understand them all:
Monthly Social Security disability benefits may be insufficient (5).
You may be ineligible since just 5% of debilitating injuries and illnesses occur on the job (6)
5 In May 2020, Social Security paid an average monthly disability benefit of $1,121.69. Source: Social Security Administration Monthly Statistical Snapshot, May 2020.
6 Social Security Administration, Annual Statistical Report on the Social Security Disability Insurance Program, 2018.
Employer Group Long-Term Disability is an excellent benefit, and you should take use of it to the fullest extent possible if your employer offers it.
A GLTD benefit may have limits that contribute to the creation of a “Disability Income Gap ” between current income and the GLTD payments you may get if you become handicapped. A typical GLTD offering may include the following:
Individual Disability Income Insurance, like GLTD, compensates you for a portion of your income if you become disabled. However, the distinction is that Individual DI:
I will never forget the day I was diagnosed with Parkinson’s disease.
It was a bright Spring day, my second visit to this particular neurologist, and in the span of a few seconds in his presence, he stated, “You have Parkinson’s disease,” and let me tell you, I was overwhelmed with emotion. I believe the most vivid memory I have is standing outside that physician’s office with my husband and crying on the floor.
My Parkinson’s illness has touched me, my family, and my workers – in fact, my entire world has been influenced by it. Parkinson’s disease has made me more conscious of something I didn’t fully get in the past: the majority of individuals who are handicapped do so as a result of a sickness, not an accident.
Disability insurance provides a measure of stability, and I cannot describe how much it means to our family.
As a licensed insurance agent and editor, Kevin is responsible for researching and writing about all matters related to insurance. He has over ten years of experience in insurance and financial planning. His history involves working with StateFarm, and other mutual companies.