Disability insurance helps protect you and your family against loss of income if you become disabled and cannot work. The insurance replaces a percentage of income during the time for which you cannot work or as specified in the policy. There are two types of coverage – short term disability insurance and long term disability insurance.
- Short term disability insurance provides benefits if you qualify and are disabled for a “short” period of time. The period of time is specified in the policy. It usually covers events and illnesses such as maternity leave, hospitalization, recovery from surgery, and illness or injuries that require an extended recovery.
- Long term disability insurance provides benefits if you qualify and are disabled for a period longer than what is covered by short term disability insurance or your disability is total and continuing.
Disability insurance can be purchased or provided in several ways:
- Individual disability insurance policies, both short and long term, are policies that you purchase and pay for yourself.
- Group disability plans are sponsored through your employer, who may offer short term and/or long term disability benefits. Your employer, you, or a combination of both can pay the premiums.
- Government mandated or sponsored programs include workers’ compensation and Social Security Disability Insurance (SSDI). If you become disabled, contact your employer and your local Social Security Administration office to find out if you qualify for benefits. They can help you estimate the disability benefit you may receive.
Group and individual disability policies usually have an elimination period, the time after the onset of your disability, before benefits begin to be paid. Benefits are paid for a certain period of time, referred to as the benefit duration. The benefit amount is determined by a calculation detailed in the policy, usually a percentage of your compensation, with a maximum dollar amount per month and per policy.
Disability benefits are typically considered taxable income if your employer pays the insurance premium. If you pay the premium, the benefits are not taxable income.
Learn more about group disability plans offered through the Church Pension Group.
Tips & Resources - Disability Insurance
Talk with an insurance agent to see if purchasing a disability policy makes sense for you.
Read your disability policy carefully as there may be an offset provision. If you have more than one policy paying benefits, there may be a reduction in the amount that each policy pays.
Review the amount of cash you have saved for emergencies. Do you have enough to pay living expenses during the elimination period should you or your spouse or partner become disabled?
This material is for informational purposes only and is not intended as investment, tax, financial, legal or other advice. Your personal decisions should be based on the recommendations of your own professional advisors.
This material is for informational purposes only and is not intended as investment, tax, financial, legal or other advice. Your personal decisions should be based on the recommendations of your own professional advisors. In the event of a conflict between this material and the official plan documents, the official plan documents will govern. The Church Pension Fund and its affiliates retain the right to amend, terminate or modify the terms of any benefit plans described in this document at any time, without notice and for any reason.