1. Disability Insurance pp. 433-435 13-4 SECTION

2. SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 2 of 15 13-4 Key Words to Know disability insurance (p. 433) Insurance that pays benefits to individual who must miss work because of an illness or injury.

3. SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 3 of 15 13-4 Annual = ( Years + Expected – Present) × Rate of × Final Disability (Worked Retirement Age ) Benefits Average Benefit Age Salary Formula

4. 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 1

5. 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.)

6. 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% × $38,740 34 × 0.02 × $38,740 = $26,343.20 Example 1 Answer: Step 1

7. 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: Step 2

8. 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 2

9. 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 2

10. SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 13- 4, Slide 10 of 15 13-4 Step: Find the monthly disability benefit. Annual Disability ÷ 12 Crowfly qualifies for SSI disability benefits under Social Security. Because they’re a couple, they’ll receive $796 per month. Example 2 Answer

11. 434:1-23