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.

 

 

 

 

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.

GENERAL RISKS & CONSIDERATIONS. Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.

NON-RELIANCE. Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

Legal Entity and Regulatory Information.

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.

Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.

J.P. Morgan may hold a position for itself or our other clients which may not be consistent with the information, opinions, estimates, investment strategies or views expressed in this document.  JPMorgan Chase & Co. or its affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer.

© 2022 JPMorgan Chase & Co. All rights reserved
 

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