Long-term disability insurance is a type of insurance that provides a portion of your income in the event that you become unable to work due to an injury or illness. This type of insurance can provide financial security and peace of mind during times of uncertainty, but it’s important to understand how to calculate your benefit amount before purchasing a policy.
If you live in Washington State, here are the steps to help you calculate your long-term disability benefit amount:
Step 1: Determine your pre-disability income
The first step in calculating your long-term disability benefit amount is to determine your pre-disability income. This is the amount of money you earn before any deductions are taken out of your paycheck.
Your pre-disability income will be used to calculate your benefit amount, so it’s important to be as accurate as possible. To determine your pre-disability income, you can look at your pay stubs, W-2 forms, or tax returns from the previous year.
Step 2: Calculate your monthly benefit amount
Once you know your pre-disability income, you can calculate your monthly benefit amount. Most long-term disability policies will provide a benefit amount of around 60% of your pre-disability income.
To calculate your monthly benefit amount, multiply your pre-disability income by 0.6. For example, if your pre-disability income is $5,000 per month, your monthly benefit amount would be $3,000.
Step 3: Determine any offsets or deductions
In some cases, your long-term disability benefit amount may be offset by other sources of income, such as Social Security Disability Insurance (SSDI) or workers’ compensation benefits. It’s important to determine if any of these offsets or deductions apply to your policy, as they can impact your benefit amount.
For example, if you receive $1,500 per month in SSDI benefits, your long-term disability benefit amount may be reduced by $1,500 per month.
Step 4: Review the policy’s benefit period
The benefit period is the length of time that your long-term disability benefits will be paid out. This can vary depending on the policy you choose, but most policies will provide benefits for a period of two to five years.
It’s important to review your policy’s benefit period to ensure that it meets your needs. If you have a chronic illness or a condition that is likely to last longer than the benefit period, you may want to consider a policy with a longer benefit period.
Step 5: Consider optional riders
Many long-term disability policies offer optional riders that can provide additional coverage. For example, a cost-of-living adjustment (COLA) rider can help your benefit amount keep pace with inflation, while a residual disability rider can provide partial benefits if you’re able to work part-time but not full-time.
Before purchasing a long-term disability policy, it’s important to consider these optional riders and determine if they’re worth the additional cost.
Step 6: Understand the elimination period
The elimination period, also known as the waiting period, is the amount of time you must be disabled before you can begin receiving benefits. This period can vary depending on the policy you choose and may range from 30 to 180 days.
It’s important to understand the elimination period and ensure that you have enough savings or other sources of income to cover your expenses during this time. Some policies may offer a shorter elimination period, but these policies may also come with higher premiums.
Step 7: Work with a qualified insurance agent
Navigating the world of long-term disability insurance can be complicated, and it’s important to work with a qualified insurance agent who can help you understand your options and choose the right policy for your needs.
When choosing an insurance agent, look for someone who is knowledgeable about long-term disability insurance and has experience working with clients in your specific situation.
Calculating your long-term disability benefit amount is an important step in protecting your income and ensuring financial stability during times of uncertainty. By following these steps and working with a qualified insurance agent, you can choose the right policy for your needs and have peace of mind knowing that you’re prepared for the unexpected.
As a law firm that specializes in disability insurance law, at Paukert & Troppmann, PLLC, we can assist individuals with long-term disability benefit claims in Washington State in a variety of ways. We can review your policy and help you understand the terms, limitations, and benefit amounts. We can also calculate your long-term disability benefit amount based on your pre-disability income, policy terms, and any offsets or deductions.
Additionally, we can assist you with filing a long-term disability benefits claim with your insurance company, ensuring that all necessary documentation is submitted and that the claim is filed correctly. If your claim is denied, we can help you appeal the decision and fight for the benefits you’re entitled to.
We understand the complex world of long-term disability insurance and can navigate it on your behalf. We can negotiate a settlement with your insurance company to ensure that you receive a fair and just settlement. If you’re struggling with a long-term disability claim, we encourage you to seek our help. Our experienced disability insurance attorneys are here to assist you in securing the benefits you deserve.