BetterCE

Insurance Continuing Education for Insurance Agents

Call Us Today! 1-888-501-7330

ex3-7 fiona

Fiona is 45 years old and her Social Security Statement estimates her SSDI monthly benefit to be $1,700 at the current time. She applies for an individual disability policy and, based on her annual income, is eligible for a monthly total disability benefit of $3,300. When the disability insurance policy is issued, the monthly total disability benefit is $3,300, the Social Security Supplement Rider is issued at $1,700, and the elimination period is 30 days. When Fiona becomes disabled three years later, she submits a claim under her individual disability policy. Thirty days after she satisfies the 30-day elimination period, the insurer makes its first monthly total disability benefit payment of $3,300. Because Fiona cannot submit a SSDI claim until she has been disabled for five months, her insurer continues making benefit payments in the amount of $3,300. Even after Fiona submits her disability claim to Social Security, the insurer continues to make monthly benefit payments of $3,300 because Fiona is not receiving any benefits from Social Security. If Social Security denies Fiona's claim, the insurer will continue making monthly disability payments of $3,300 for the duration of the policy's benefit period. However, if Social Security approves Fiona's claim, the insurer will subtract the monthly amount of Fiona's SSDI benefits from the payment it makes. In other words, once Social Security begins making SSDI payments to Fiona at $1,700 per month, the individual disability policy's benefit payment will be reduced to $1,600.