Insurance Company Looks at Salary as Reported by the Employer When Calculating Disability Benefits

Insurance Company Looks at Salary as Reported by the Employer When Calculating Disability Benefits

By Steven Muller LL.B, J.D, LL.M.,

Vice-President, Share Lawyers, Lawyers

Most short-term and long-term disability policies pay a percentage of salary as the benefit. Having the correct salary information can make the difference of thousands of dollars. Typically, the salary information comes from the employer. Salary as defined in most disability policies are base salary and not overtime, bonuses or commissions. The employer reports salary on a periodic basis and premiums are adjusted accordingly.

It is important to ensure that your employer is reporting the correct salary to the insurance company. Premiums that are taken off of your salary do not always reflect your current salary level. At the time of a claim for long-term disability benefits, the insurer will be looking at the salary as reported by the employer on the date of disability. If the reported salary and premiums that are taken off are lower than the actual salary the insurance company will try to use the lower amount. So before making a claim make sure your current salary is being properly reported to the long term disability insurance company.

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