Disability Basics
What is the definition of disability insurance?
Insurance that replaces a portion of income when an individual is unable to work due to illness or injury.
What is the term for the length of time benefits are paid?
Benefit period.
What is employer-sponsored disability insurance called?
Group disability insurance.
What is the process of filing for disability insurance benefits called?
Making a claim
Are individual disability insurance premiums tax-deductible?
No, they are generally not tax-deductible.
What percentage of income is typically covered by disability insurance?
50-70% of pre-disability income
What is an "own-occupation" policy?
Covers individuals if they cannot perform their specific job duties
What type of disability insurance is purchased individually?
Private/individual disability insurance.
What documentation is typically required to file a disability claim?
Medical records, proof of income, and physician statement.
Are employer-paid disability benefits taxable?
Yes, they are considered taxable income.
What is the waiting period before benefits begin called?
Elimination Period
What is a non-cancelable policy?
The insurer cannot cancel the policy or increase premiums as long as premiums are paid.
What government program provides disability benefits in the U.S.?
Social Security Disability Insurance (SSDI).
What happens if a claim is denied?
The claimant can appeal the decision.
What federal law protects individuals from discrimination due to disability?
Americans with Disabilities Act (ADA).
True or False: Disability insurance only covers work-related injuries.
False. It covers both work and non-work-related disabilities.
What is a residual benefits rider?
Pays partial benefits if the insured can only work part-time due to disability.
What is the difference between group and individual disability insurance?
Group policies are employer-provided with limited coverage; individual policies offer customized coverage.
What is the term for when an individual returns to work but still receives partial benefits?
Partial or residual disability benefits.
What is the maximum monthly SSDI benefit in 2025?
Approximately $3,900.
What is the main difference between short-term and long-term disability insurance?
Short-term covers weeks to months; long-term covers years or until retirement.
What is the difference between guaranteed renewable and non-cancelable policies?
Guaranteed renewable: premiums can increase; non-cancelable: premiums cannot increase.
What is key person disability insurance?
Covers loss of income if a key employee becomes disabled.
What is the typical tax treatment of disability benefits?
Tax-free if premiums are paid with after-tax dollars; taxable if paid with pre-tax dollars.
What is ERISA, and how does it relate to disability insurance?
Employee Retirement Income Security Act; governs employer-sponsored disability plans.