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Disability Insurance

SECTION. 13-4. pp. 433-435. Disability Insurance. Key Words to Know. disability insurance (p. 433) Insurance that pays benefits to individual who must miss work because of an illness or injury. Formula. Annual = ( Years + Expected – Present) × Rate of × Final

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Disability Insurance

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  1. SECTION 13-4 pp. 433-435 Disability Insurance

  2. Key Words to Know disability insurance (p. 433) Insurance that pays benefits to individual who must miss work because of an illness or injury.

  3. Formula Annual = ( Years + Expected – Present) × Rate of × Final Disability (Worked Retirement Age ) Benefits Average Benefit Age Salary

  4. Example 1 Alicia Doub-Tee had been working at Northern State University for 21 years when she became permanently disabled and could not continue to work. She was 52 year old and had planned to retire in 13 years at the age of 65.

  5. Example 1 (cont.) Her final average salary was $38,740. Northern State’s rate of benefits is 2 percent. What is her monthly disability benefit?

  6. Example 1 Answer: Step 1 Find the annual disability benefit. ( Years + Expected – Present) × Rate of × Final (Worked Retirement Age ) Benefits Average Age Salary (21 + 65 – 52) × 2% × $38,740 34 × 0.02 × $38,740 = $26,343.20

  7. Example 1 Answer: Step 2 Find the monthly disability benefit. Annual Disability ÷ 12 $26,343.20 ÷ 12 = $2,195.266 or $2,195.27

  8. Example 2 John Crowfly has contributed to Social Security for the past 15 years. He becomes disabled while working and applies for Supplemental Security Income (SSI).

  9. Example 2 The basic monthly SSI disability check is $531 for one person and $796 for a couple. To qualify for SSI you need 20 quarter credits (5 years) in the last 10 years. If he qualifies for SSI, what will Crowfly’s monthly benefit be for him and his wife?

  10. Example 2 Answer Step: Find the monthly disability benefit. Annual Disability ÷ 12 Crowfly qualifies for SSI disability benefits under Social Security. Because they’re a couple, they’ll receive $796 per month.

  11. 434:1-23

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