We no longer support this browser. Using a supported browser will provide a better experience.

Please update your browser.

Close browser message

Wealth Planning

Understanding disability insurance


Understanding disability insurance1

Disability insurance can help replace some of your income if you become disabled and are prevented from working, either in the short term or the long term.

When speaking with your advisors about insurance, the conversation will often focus on life insurance and rarely on disability insurance. However, it’s far more likely that you will become disabled while you are employed than you will pass away during that time. Here are some things to keep in mind as you consider disability insurance:

What’s the difference between short-term disability and long-term disability?

Both short-term and long-term disability insurance cover you for a disability that is not job-related. Benefits generally begin after an elimination period, which is a waiting period at the beginning of your disability before your insurance begins to pay out. In general, short-term disability insurance is only available through your employer. If you are unable to work because of an illness or accident, or even a pregnancy, short-term disability will pay a benefit for a short period of time, usually one year or less. It will begin after an elimination period, which is often 30 days. Long-term disability pays a benefit after a longer elimination period (generally between 90 and 180 days), but payments continue until you are 65 or are no longer disabled.

The elimination period for your long-term disability insurance (if you have it) often coincides with your short-term benefits period.

I’m covered through my employer. Do I need a private disability policy?

Many employer policies provide very good coverage. There are two things you should think about if you are considering a private policy.

Taxability of benefit

If your disability premium is paid with a pre-tax deduction, as it is in many companies, your disability benefit would be taxable to you. On the other hand, if you pay your premium (either for your employer’s policy or for a private policy) with after-tax dollars, your benefit would be tax-free when you collect it.

Since taxes can take a significant bite out of your nominal benefit, consider whether you need to augment your employer’s coverage.

Portability

An employer disability policy is generally not transferrable if you leave your job. If you leave to start your own business, or if you go to work for an employer who doesn’t provide coverage, you will need to have a private policy if you want disability coverage.

What are some other reasons to supplement my employer policy with a private policy?

A private policy allows you to tailor the benefits to your needs. One of the most common benefits that you might want to include is coverage if you are unable to perform the regular duties of your “own occupation” (different insurers have different names for this feature). In many long-term disability policies, if you can do any work at all, you may no longer be deemed to be disabled under the policy. If instead you are insured for your “own occupation” through a private policy, your disability coverage can continue even if you are able to work at a different occupation than the one in which you were employed when you bought the policy.

Talk to a J.P. Morgan advisor or your insurance agent about your disability insurance needs and to review any existing coverage.
 

1.J.P. Morgan Wealth Management does not offer, service, transact or provide advice on insurance products or services. J.P. Morgan Wealth Management is not a licensed insurance agent.

 

 

 

 

IMPORTANT INFORMATION

This material is for information purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). The views and strategies described in the material may not be suitable for all investors and are subject to investment risks. Please read all Important Information.


Check the background of Our Firm and Investment Professionals on FINRA's BrokerCheck

To learn more about J. P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our  J.P. Morgan Securities LLC Form CRS and  Guide to Investment Services and Brokerage Products.

This website is for informational purposes only, and not an offer, recommendation or solicitation of any product, strategy service or transaction. Any views, strategies or products discussed on this site may not be appropriate or suitable for all individuals and are subject to risks. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor's own situation. 

This website provides information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). When JPMS acts as a broker-dealer, a client's relationship with us and our duties to the client will be different in some important ways than a client's relationship with us and our duties to the client when we are acting as an investment advisor. A client should carefully read the agreements and disclosures received (including our Form ADV disclosure brochure, if and when applicable) in connection with our provision of services for important information about the capacity in which we will be acting.

INVESTMENT AND INSURANCE PRODUCTS ARE: • NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JP MORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED

Equal Housing Opportunity logo

J.P. Morgan Chase Bank N.A., Member FDIC Not a commitment to lend. All extensions of credit are subject to credit approval 

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment advisor, member FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Please read additional Important Information in conjunction with these pages.