Benefits expanded: AD&D, short, long term disability, EAP

0:00- [Instructor] So, let's say that you earn $3,800 per month and you have a long recovery from a car accident that keeps you from working for a year. So, based on the information that's given, how much in benefits would you get and how would that compare to how much you would have earned?

0:19Pause this video and have a go at that. Okay, now let's just review these different benefits that our job offers. Short-term disability insurance, this replaces 80% of your income if an illness or injury, so this seems relevant, prevents you from working. This will continue for two months.

0:36So, this one seems very relevant. Long-term disability insurance replaces 70% of your income if an illness or injury prevents you from working for an extended period of time. And we're definitely going more than just two months, we're going for a whole year. And the benefits may continue for up to 36 months.

0:55So, this one seems relevant as well. AD&D, if you're a member of my generation, you might interpret that as advanced "Dungeons & Dragons," but that is not what we are talking about. We are talking about accidental death and dismemberment, which is a pretty troubling title.

1:12But, it is in a situation where because you die or you get dismembered, like anyway, I don't want to talk too much about dismemberment, but, so much so that you really can't work. And so this is really to support your family or I guess in the situation, if you're dead, it's to support your family, if you're dismembered or you just can't work anymore, this $100,000 is to help you out.

1:37Well, this is if the accident results in death. And then I guess this next one might be just like for certain serious injuries. So maybe so serious that you might not be able to work anymore. That's probably where that second deed that dismemberment comes in. But, this does not seem relevant to this situation.

1:53Hopefully, well, we're assuming you did not die from this car accident and let's also assume that you were not dismembered. So this does not seem relevant, at least in this situation. And EAP benefits, that stands for employee assistance programs. Up to five free counseling sessions a year, free retirement and investment planning sessions, legal document review by a participating attorney.

2:14So, these are the types of benefits that you could use regardless of whether or not you got into a car accident. So, from the point of view of lost income or how much income you're recovering, this isn't so relevant. You could still go to those counseling sessions, although you could have gone to them even if you didn't get into a car accident.

2:31So, let's calculate how much these would actually amount to. So, what typically happens is that you're going to use your short-term disability insurance first for two months and then your long-term disability will kick in for the remainder of the time that you are out of work, so that will be another 10 months.

2:49So, really what we're going to have, we're going to have two months on short term. Actually, maybe I'll just calculate it for the short term. I'll do it in this pink color. So in the short term, I'm going to have two months times 80%, which is 0.8, times my monthly income, times $3,800.

3:11And that is equal to, let me get a calculator out. So, two times 0.8 times 3,800 is equal to $6,080. Let me write that down. $6,080 is what I'm going to get from short-term disability. And then in, let's say in green, I'm having trouble, there you go. In green, let's figure out the long-term disability.

3:44That's going to be the remainder. Those are going to be those 10 months. So 10 months times 0.7 of my income, that's 70% times 3,800. $3,800 is equal to, get the calculator out again. And I am going to get, so, 10 times 0.7 times 3,800 is equal to another 26,600.

4:1626,600. 6,600 is what I would get from the long-term disability insurance. And so, in total, my total benefits I will get for that year are going to be this 26,600 from the long term. And that's on top of the 6,080 from the short term. And so that's 32,680 total.

4:45So, let me do that in this color. So, 32,680 in benefits to cover lost income. Now, how does that compare to how much I would have made? It's going to be less because I was only covering 80% and then 70%, but let's just look at the absolute number. So, I would have made, if I was working, $3,800 per month times 12 months, I would have made $45,600.

5:15So my shortfall, the income that I'm not able to recover because of these benefits, I'll subtract this out. So, minus the $32,680. So, that's how much this accident is making me from earning this coming year. And the reason why it won't cover, oftentimes won't cover 100% is you want some incentive for someone maybe to not just keep using this.

5:42If they're really injured, of course, they should be using this long-term disability insurance, but there's an incentive because you're still getting less than you would if you're working to come back to work. And, of course, at some point, it does actually tap out.