Like most Americans, clergy and church leaders neglect securing disability coverage despite the fact that research shows people are much more likely to become disabled for more than three months than die in any given year.
States require us to purchase auto insurance. Banks make certain we have mortgage insurance. Parents with children buy life insurance to protect their families in case of an unexpected death.
Church leaders need to ask themselves, “Can I and my family afford to be without disability insurance? Do I want to find myself depending upon what may be limited resources from my church or faith-based organization or family and friends, if I become disabled?”
Consider these facts related to disability insurance:
- 75 percent of disabilities result from illness, not accidents.
- Financial crises associated with disability are the leading cause of personal bankruptcies and responsible for nearly 50 percent of mortgage foreclosures.
- 1 in 3 women and 1 in 4 men will be out of work for 90 days or more during their working lifetime due to disability.
When a church leader’s income is the primary one, disability can become a real hardship for the household. If you think of a disability policy as insuring against loss of income, you are much more likely to view it as a necessity.
Nine out of 10 Americans who have disability coverage are insured through their employers. Churches can provide two types of disability insurance—short-term, (STD), and long-term, (LTD).
STD insurance is generally limited to 60-180 days, (although some may last up to a year), and typically pays 60-80 percent of your gross salary. Most plans begin paying benefits after you provide written documentation from a physician of your condition and estimated time away from work. You may also have to wait up to 20 days between the date you stop working and the date your benefits begin. Some employers may require you to use up your sick/vacation leave before your disability benefits begin.
An LTD policy begins if STD ends before you can return to work. Some employer STD plans automatically convert to LTD. Check the terms of your employer’s plan closely. At MMBB Financial Services, members whose employers are enrolled in the Comprehensive Plan receive life and disability insurance in addition to a 403(b) retirement income account.
Many small churches and faith-based organizations are not able to offer STD or LTD insurance and church leaders should consider purchasing an individual LTD plan. While they can be costly, the peace of mind you and your family will have in the event you become disabled is worth the investment. Individual LTD policies are extremely customizable, so…
Consider the following before your purchase:
- Determine how much you spend monthly on necessities such as housing, food, utilities, child care, transportation and other living expenses. Don’t forget the premium payments for your LTD plan and added medical costs. Aim for a plan that will cover these expenses. Factor in your spouse’s income and an emergency fund if you have one.
Decide how long you want the benefits period to last – the longer the benefits period, the higher your premium payment. For LTD it can range from a set number of years, such as two to five years, or until a certain age, usually 65.
- Consider making the policy “non-cancelable and guaranteed renewable.” These protections guarantee that once a policy is in-force there will be no changes to your monthly benefits, or your policy benefits during the life of the policy as long as the premiums are paid. This can be critical when you are already living on a reduced income. Guaranteed renewable by itself only provides that your insurance cannot be dropped but the premium can be increased.
- Pay attention to payout restrictions for behavioral health conditions, pre-existing conditions or family medical history.
- Know whether you are required to coordinate with government benefits such as those available from the Veterans Administration or Social Security.
If you will be on extended leave you can apply for Social Security Disability Insurance (SSDI). SSDI pays benefits to people who cannot work due to a medical condition that is expected to last at least one year or result in death. SSDI is not available for partial disability or short-term disability. Apply as soon as possible. Waiting to apply may result in an income gap while your SSDI claim is processed. For more information on applying for SSDI visit https://www.ssa.gov/planners/disability//
Finally, be sure to read the fine print on your disability policy. Become familiar with it before you need it and before you are distracted with managing your disability.
Church leaders need only look to their congregations to understand that various health conditions can arise that affect a person’s ability to do their work, or can result in a long-term absence from work. Disability insurance can allow your family to tend to your recovery without the burden of worrying about paying the bills.
Portions of this article previously appeared in the Sept/Oct 2015 issue of Church Executive magazine.