This is one area where a competent financial

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on the principles of sound financial management. This is one area where a competent financial professional can add significant value to their clients. Disability Planning Just as companies can provide a solution to offset the untimely death of an employee, they can also offer benefits in the event of disability. The first item to be addressed by a company who is considering
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offering a disability benefit is to define “disability” clearly and objectively. The easiest way to do this is to assume a third party's definition. The safest path for a company is to simply adopt the definition of disability as endorsed by the Social Security Administration. (Links to an external site.)Links to an external site. If the Board of Directors determines a different definition, then they may be opening themselves up to potential litigation. Some companies offer a formal disability insurance program. In such a case, they should be careful to coordinate any disability programs offered through their retirement plan with what insurance is already covering. If there is overlap, then the disability insurance the employer has already been paying for could deny the claim based upon duplicate coverage. Typically, the first thing that a company will do when disability occurs is to declare the disabled employee fully vested. Some plans will offer a reduced benefit payable upon the occurrence of disability. Others will permit benefits to continue to accrue as if the employee were still working and not disabled! This usually occurs in the form of the years of service portion of a defined benefit’s formula. Benefits might accrue until the employee reaches the employer's chosen normal retirement age. There are two types of insurance that a participant (and you) can buy to help themselves in the event of disability: short-term disability policies and long-term disability policies. Both of these policies are available to add during open enrollment (this is the annual time period when employers allow employees to alter their benefits...usually in November). Excluded Events Regardless of whether a participant selects short-term coverage, long-term coverage, or both, there are certain disabling events that are expressly not covered by most plans. A list of some of these excluded events is below: 1. Self-inflicted injuries 2. Mental health issues 3. Alcoholism or drug-addiction 4. Participation in a riot 5. Injury due to an act of war 6. Loss of certification or a license (that prevents employment) 7. Incarceration 8. Occupational injury (this is actually a worker's compensation claim) Short-Term and Long-Term Disability Policies A short-term disability policy offers immediate coverage in the event of disability. This does not involve workplace injury (that would be a worker's compensation claim). Short-term disability policies typically provide up to 60% of a participant's full salary. This can be a great bonus while recovering from a disability, which is hopefully temporary in nature.
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  • Spring '14
  • VOSS,JAMESA
  • Cash balance plan, HCES

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