Official Disability Insurance Income Guidelines

Disability income insurance provides a benefit to an individual who is unable to work due to an illness or injury that occurs. Such an illness or injury is expected to last for a long period of term or result in the early death of the individual.  The benefit provided in a disability income insurance policy replaces loss earnings due to a person’s inability to work.

About Disability Income Insurance

Disability income insurance benefits are based on earned income. The amount that a person makes is replaced partially through the benefit payable in a disability income insurance policy. The premiums charged for the coverage are based on the type of occupation that the person is involved. Occupations deemed more risk would have a higher premium and lower benefit level than those occupations that do not have a lot of risk.

Disability Income Insurance Benefits

Disability income insurance typically replaced up to 2/3rds of monthly income loss due to a disability. This amount is based on providing an incentive to encourage people to get back to work through recovery, rehabilitation or retraining. Disability income insurance benefits are also coordinated with social security disability, which is provided for workers who have a credited 20 of 40 quarters.

 



Is income from disability insurance taxable?



Income from disability insurance can be taxable, but it is not always. If you paid for your own disability insurance with after-tax dollars, the proceeds from the policy will not be taxable. However, if you were the recipient of a disability policy that was paid for by your employer and you did not purchase it, the proceeds will generally be taxable. Disability insurance policies generally pay for only about two thirds of your income because the benefits are not taxable when you buy the policy. This comes close to replacing your after-tax income. 



Does my amount of personal disability insurance affect how much business overhead insurance I can get?



The amount of personal disability insurance that you have should not affect the amount of business overhead insurance that you can purchase from an insurance company. Your personal insurance policies and your business overhead insurance are not related, and you should keep your business and personal matters separate.

Personal disability insurance is designed to pay for your personal expenses like mortgage payments, auto payments and groceries. This can be a long-term type of coverage that lasts until the age of 65. 

Business overhead insurance is a type of disability coverage that pays for the overhead expenses of your business. It pays for wages, rent, utilities and other expenses that your business has.

You should consider purchasing both personal disability insurance and a separate business overhead policy to ensure that both your business and personal lives are taken care of if you are disabled. 

blog comments powered by Disqus