How Can Disability Insurance Be Affected By Your Job Promotion?
If you recently were promoted, revisiting your disability insurance coverage should be a priority. If you have a group disability insurance policy, your monthly benefit amount may be increased to reflect your new income. However, depending on your employer’s plan, you may already be at the maximum monthly benefit prior to your promotion.
For example, your group’s long term disability insurance plan has a 60% of your earnings to a maximum of $5,000 disability benefit per month. Your promotion has yielded a new annual income of $120,000 or ($10,000 monthly income). 60% of your new monthly income is $6,000. If your group’s plan has a maximum disability insurance benefit amount of $5,000, you are not adequately insuring your income. With this scenario, your group disability insurance plan is only insuring 50% of your monthly income.
You may think you can live off of that $5,000 per month while you are disabled; however if your employer has paid for your group long term disability premiums your monthly benefit will mostly likely be taxable. If you paid for a portion of your disability premium and your employer paid for a portion, the portion that your employer paid for will be taxable. For example if it is a 50/50 split, your benefit will probably be 50% taxable.
With an individual disability plan, your disability benefit will most likely be a tax free benefit provided you paid for the premiums yourself. With your monthly group benefit of $5,000, you may qualify for an individual disability monthly benefit of $1,500 (amounts vary depending on your occupation, earnings etc.).
Even if you already have an individual disability insurance policy, you should take another look at your existing coverage. You may qualify for additional coverage. The amount of disability insurance you qualify for is based upon your age, your income, and your occupational duties. There are also additional riders you may qualify for that your group disability policy may not provide; such as a Cost of Living Rider, Benefit Increase Rider, Residual Disability Rider.
You’ve worked hard for your promotion. Protecting your new income shouldn’t be! Please contact me to today, so that I can help you make the right choice in your new insurance plan.
About the author: Teri Costen has been in the life insurance business for over 20 years. She is a mother of three who enjoys working out, taking aerobic kickboxing classes, and making stained glass. Teri believes that finding the right life insurance policy helps protect your family and loved ones. You can contact Teri at 1-800-651-1953 or TCosten@Pivot.com.