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 your covered compensation 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.