Have you ever considered what would happen if an illness or injury prevented you from doing your job?
The Social Security Administration projects that one in four 20-year-olds will require a disability-related leave before reaching retirement age. In fact, nearly a third of U.S. households in the last 10 years had a main wage earner experience at least one health condition resulting in a disability leave of 30 days or more.
While many working adults believe disabling conditions are typically covered by workers’ compensation or Social Security, fewer than one in 10 disabling accidents or illnesses is related to work.
“Lost wages can have devastating long-term financial consequences, so it’s important to protect your income,” says CEA Insurance Specialist Tom Lally, who presents on insurance and related topics for teachers. “Long-term disability insurance is a crucial safety net that pays 50–60 percent of your income if you’re unable to work for an extended period of time.”
But before paying for an individual policy, he adds, educators should exercise their due diligence.
Here are 10 questions to ask before purchasing private long-term disability (LTD) insurance.
- Have you looked into the Teachers’ Retirement Board’s disability benefit? As a member of the Teachers’ Retirement System, you are automatically covered by it if you qualify.
- Does your board of education offer a private LTD policy? If so, are you covered?
- If so, would an additional individual policy consider the benefit payments from the group policy as “other income” and consequently reduce your benefit payment by that amount? Inquire, and be certain, of what the policy considers “other income” that would offset or reduce your individual policy’s benefit payment. For example, does the individual policy reduce the benefit payment by the amount received as a disability payment from the Teachers’ Retirement Board? Is the policy’s disability payment reduced by Social Security income (if eligible) and/or TRB disability benefit payments?
- Have you looked at NEA’s individual income protection plans? Regarding offsets with other sources of income, NEA protection would offset the benefit payment by other group disability income.
- What income is being protected? Is it just your base salary, or is it total earned income (for example, including stipends)?
- How much is being protected? Disability protection is generally a percentage of monthly income with a maximum benefit amount—for example, 60% of monthly income to a maximum amount of $6,000 per month.
- How does the policy define “own occupation”—meaning, what happens if you regain the ability to work in some capacity, but not in your former job?
- What limitations are imposed with respect to pre-existing conditions?
- Have you researched other options for the same or better benefits and a better cost?
- When would disability payments begin—for example, after 30 days from being unable to work because of a disabling condition? 90-days? 180-days?
Take advantage of free CEA training that helps you protect and make the most of your income. Talk to your local president or contact [email protected] to schedule training near you.
