Disability Insurance pp. 433-43513-4SECTIONSECTION

SECTION

Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 2 of 15

13-4Key Words to KnowKey Words to Know

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

SECTION

Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 3 of 15

13-4

Annual = ( Years + Expected – Present) × Rate of × FinalDisability (Worked Retirement Age ) Benefits Average Benefit Age Salary

FormulaFormula

SECTION

Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 4 of 15

13-4

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.

Example 1Example 1

SECTION

Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 5 of 15

13-4

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

Example 1 (cont.)Example 1 (cont.)

SECTION

Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 6 of 15

13-4

Find the annual disability benefit.( Years + Expected – Present) × Rate of × Final(Worked Retirement Age ) Benefits Average

Age Salary

(21 + 65 – 52) × 2% × $38,74034 × 0.02 × $38,740 = $26,343.20

Example 1 Answer: Example 1 Answer: Step 1Step 1

SECTION

Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 7 of 15

13-4

Find the monthly disability benefit.Annual Disability ÷ 12$26,343.20 ÷ 12 = $2,195.266 or $2,195.27

Example 1 Answer: Example 1 Answer: Step 2Step 2

SECTION

Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 8 of 15

13-4

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

Example 2Example 2

SECTION

Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 9 of 15

13-4

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?

Example 2Example 2

SECTION

Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 10 of 15

13-4

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

Example 2 AnswerExample 2 Answer

434:1-23434:1-23