A disability income policy is written with Social Security integration. If the insured becomes totally disabled and is approved for Social Security disability benefits, the private insurer will:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Integration coordinates private disability benefits with benefits from other income sources, most commonly Social Security Disability Income and workers' compensation, so that the insured's combined income does not exceed a targeted replacement level. When the insured is approved for SSDI, the private insurer reduces its monthly benefit by all or part of the Social Security payment, subject to a minimum-benefit floor stated in the policy. Integration prevents overinsurance, where an insured would receive more while disabled than from working, which would weaken the incentive to return to work.
Why the other options are wrong
- B) Paying the full private benefit in addition to Social Security could push total disability income above the insured's pre-disability earnings. Integration exists to offset other benefits and prevent that overinsurance.
- C) Integration reduces the private benefit by the Social Security amount, but the policy typically continues to pay a stated minimum benefit. Termination of coverage is not the purpose of the offset.
- D) No premium is refunded when benefits are integrated. The integration provision operates on the benefit payment itself, reducing the insurer's monthly obligation by the offset amount rather than returning premium.
Memory hook
SSDI check arrives, private insurer trims its check so the total is right.