I Have Life Insurance. Will That Affect My SSDI Benefits?
Many people are disabled and unable to work. In many cases, this qualifies them to receive Social Security Disability Insurance (SSDI) benefits. However, depending on the type of Social Security benefit you’re getting and the resources you have, your benefits could be greatly reduced.
Many people have questions about life insurance. They may have their own policy or perhaps they are the beneficiary of a family member’s policy. Could this affect their SSDI benefits?
Possibly. The Social Security Administration (SSA) handbook states that life insurance is a resource if you own it and it has a cash surrender value. Burial insurance and term insurance, for the most part, would not be resources because they have no cash surrender value.
Life insurance that has a cash surrender value and is owned by you (or your spouse) is excluded from resources only if the total face value of all policies you own on any one person is not more than $1,500. This would exclude most policies, as most people wouldn’t bother to get a policy for such a low amount, given that the average cost of a funeral nowadays is roughly $7,000 to $8,000.
If you are receiving Social Security retirement benefits, you don’t have to worry. There are no income or asset restrictions. No matter what you own, you will get the full amount of these benefits.
However, if you’re collecting SSDI benefits, receiving a life insurance policy payout or taking out a loan against your own policy’s cash value could negatively affect your Social Security benefit amount. If you have not yet reached retirement age, life insurance payments can go against your benefits. Generally, for every $1 earned, SSDI benefits are reduced by 50 cents.
In short, the living benefits one can receive from a life insurance policy can affect SSDI benefits, especially if you are drawing on benefits from your life insurance policy while alive. For example, some life insurance policies offer accelerated death benefits or critical illness benefits. This means that if you are diagnosed with a qualifying illness or disability, and use these benefits, your SSDI benefits could be greatly reduced. The SSA may consider these living benefits when assessing financial eligibility for SSDI. This means you might not qualify or you will receive a reduced amount of money.
If SSDI benefits are affected, you can appeal the decision. It’s best to discuss your situation with an experienced attorney.
Learn More About Social Security Disability Benefits
There are a couple Social Security programs in place. If you are using both SSI and SSDI and have a life insurance policy in place, your benefits could be affected.
If you are disabled, make sure you get all the benefits you are entitled to receive. A White Plains Social Security Disability lawyer from The Law Office of Michael Lawrence Varon can assess your situation and give you knowledgeable guidance and advice. Schedule a consultation today by calling (914) 228-1770 or filling out the online form.
Source:
progressive.com/answers/does-life-insurance-affect-social-security/
