Disability Insurance
If you are unable to work because of an injury or sickness, how would you pay the bills?
- Savings? How long would your savings last?
- Sell Assets? How much will you get for used items if you need to sell today?
- Social Security? Benefits are difficult to obtain and it requires a lot of paperwork.
- Loans? It’s difficult to get a loan without an income.
- Donations? Will your family and friends help?
- Spouse income? Will one income cover all your bills and additional medical expenses?
Disability insurance is designed to replace a percentage of your income while you are out of work due to a covered illness or injury. It protects one of your most important assets, which is your ability to earn a living. If you need the salary you earn, you also need disability income insurance. If you are injured on the job, your employers’ workers compensation policy will pay you a percentage of your lost wages.
Social Security Disability benefits are available to covered workers who are unable to perform any gainful employment, not just the job you were performing at the time the disability began. You must be disabled for five months and the disability is expected to last 12 months or longer. Claim processing may take up to three months. After 24 months of benefits, recipients qualify for Medicaid.
Group policies or employer paid policies are relatively inexpensive to purchase and cover employees while they work for your nonprofit. Groups with three or more employees may be eligible to purchase policies. The typical policy replaces 60% of earned salary after a defined waiting period for a specific period of time.
Short Term Disability (STD):
- Pays benefits for 13 or 26 weeks
- Shorter waiting period; typically one week for sickness and one day for injury
Long Term Disability (LTD):
- Pays benefits to age 65 or a specified length of time selected
- Longer waiting period; typically 90 days or 180 days
The waiting period is a deductible. It’s the period of time the employee must be totally disabled before benefits are paid.
The definition of disability is important to consider when purchasing a policy. Some policies will pay only if you can engage in no gainful employment and some will pay if you cannot do your job. Partial disability provisions are also important to consider. An employee may be able to return to work on a part time basis after a disability and the policy would continue to pay a portion of the salary not earned.
Contact Nonprofit Resources (click here) for information about disability insurance or to get a quote for your nonprofit.
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