Is the monthly benefit on my personal Long Term Disability policy offset by Social Security Disability Ins.?

Question

I am considering purchasing a personal Long Term Disabilty policy from Assurity Life. My monthly premium will be $80 and should I become disabled my montly benefit will be $2570. Is it true that if I also receive Social Security Disability Benefits, this amount would be deducted from the amount Assurity needs to pay me? In other words if I receive $1570/month in SSDI, my personal LTD policy would only need to pay me $1000/month?

Also I'd like peoples' personal opinions as to whether or not this is worth the $80/month premium. Thanks.

Answer 1

Well, you'll have to read the fine print of the policy, but generally, yes, it's true.  What they don't tell you, though, is it's much harder to get SSDI than it is to collect under your private policy.  Also, SSDI has a TWO YEAR waiting period.  Your LTD policy is probably 180 days.

Is it worth it?  Yes.  You're much more likely to become disabled, than to die, until you hit 60.

Answer 2

Yes, I'm sorry to say that if the contract says there is an offset, then they subtract the amount you receive from Social Security from your benefit.  The contract also usually states that you must apply for Social Security Disability.  But getting Social Security Disability Insurance is not easy.  A person must be 100% disabled and unable to work at all.  If you receive SSDI and you have children, your children usually also receive SSDI from your benefit until they are eighteen years old.  Most long term disability insurance companies also subtract the children's SSDI benefit amount from what they pay you .  There is, however, usually also a minimum benefit that they must pay after they subtract the offsets.  For my Long Term Disability Insurance, the minimum amount is $100.00 per month. You should check with Social Security to find out what your SSDI benefit would be if you became disabled.

Only you will know if the policy is worth it. Read the contract very carefully.

By the way, disability insurance payments to you ARE taxable as income and Social Security payments may be totally or partially taxable as income depending on your family's TOTAL income.

Answer 3

Usually there is a rider that you can purchase in a Disability Policy that will either have your benefit be offset by SSI or not.

If you choose the rider to not have the benefit offset by SSI it usually costs more.

Remember the more the insurance company pays (the more the premium costs).

Is it worth the $80?

Well, only you can decide that. Usually Disability Insurance only provides up to 66.6% of your monthly income as a maximum Benefit.

If that's correct, think about it this way...

So you would be insuring about 66% (if that's the benefit you chose) of your income for the cost of about 2% of your income per month.

Answer 4

Whether or not it is integrated with social security disability is something you would have to ask the agent.

  Bear in mind,  it can take a long time to be approved  for ss disability, even though you are disabled.

  If you have an illness or accident that may take a year to recover from, there is little chance you would be approved for social security, but what would you do for income during this period of time???  That is why you would need  adequate long term disability.

  No ins co would want to insure you for more than 60% of your income. Why?  At this point, there is little incentive to want to return to work!

  Example, you earn $ 3000.00 at work.( a month) You have $ 1000,00 LTD,  you may wish to consider another $ 1000.00 on your own. this would give you $ 2000.00 a month income while you are disabled.--with no taxes!  

Do you have a car loan??? Do you have disability coverage with your loan???

Answer 5

Yes the SSDI part is true. Secondly the worth of $80 per month can only be determined by you. Bill Gates can flush $80 down the toilet while other people rob 7-11 to get $80.  Most DI policies have a much more relaxed definition of disability than social security. Social security says to be disabled you must not be able to perform ANY occupation. There is a good chance you could be disabled and never be able to collect from SSDI.