Recent 2023 statistics have revealed that at least three of every four Americans have some life insurance. Unsurprisingly, with so many people having life insurance, many life insurance recipients receive life insurance payouts after the death of a loved one.
However, what happens when you receive a life insurance payout and are currently receiving Social Security disability benefits? In this article, the Dyer, Garofalo, Mann, & Schultz law firm team has explained what you need to know in this situation alongside other pertinent information.
The Social Security Administration (SSA) evaluates disability based on an individual’s ability to work, considering factors such as the severity of the disability, the ability to perform previous work, and the possibility of adjusting to other forms of employment.
Thus, an individual receiving Social Security disability benefits might encounter reductions in payments if more money comes into play, as it’s an external factor that can influence eligibility. This is why, typically, if you are not of retirement age, your Social Security disability benefits could be affected if you receive a life insurance payout.
Yet, if you are of retirement age (66 and older), you will no longer have Social Security disability benefits but rather Social Security retirement benefits. Your monthly Social Security benefits won’t be affected when receiving life insurance payments. Basically, this means you won’t need to worry about a life insurance policy affecting it.
If you aren’t of retirement age, your Social Security disability benefits will likely be negatively impacted. For example, the general rule is that for every $1 earned externally – like through a life insurance payment – your Social Security disability benefits will be reduced by $0.50.
Since it can be challenging to work out, hiring an attorney to analyze your life insurance policy is best.
Although life insurance itself does not affect SSDI eligibility, the living benefits one can receive can affect social security disability benefits. This is usually the case 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, allowing policyholders to access a portion of their policy’s death benefit while still alive if diagnosed with a qualifying illness or disability.
In such cases, the SSA may consider these living benefits when assessing financial eligibility for SSDI, and you might not qualify, or you will receive a reduced amount of money for SSDI benefits.
Generally, life insurance does not count as income for SSDI purposes. The death benefit paid out to you is typically not considered when determining eligibility or calculating benefit amounts.
However, if the living benefits from a life insurance policy exceed the income and resource limits set by the SSA, it could impact your eligibility for SSDI. That’s why speaking with an Ohio SSDI attorney from Dyer, Garofalo, Mann, & Schultz is crucial.
We can help you determine if your SSDI eligibility or benefits will be affected by drawing on your life insurance or receiving payments from a loved one who passed on. You can contact us here, and we’ll arrange a consultation.
Before establishing Dyer, Garofalo, Mann & Schultz L.P.A., Doug Mann, a top Ohio Injury Attorney served as a bodily injury claims adjuster at a major insurance firm. With over 40+ years of experience, Doug’s background has proven invaluable in securing maximum cash settlements for his clients swiftly. Since leaving the insurance industry, Doug has devoted his entire legal career to assisting injured clients during their times of greatest need.
This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by Founding Partner, Doug Mann who has more than 20 years of legal experience as a practicing personal injury attorney.
Keep up to Date with Our Newest Firm Updates
When a dog bite incident occurs, many people wonder: “How many times can a dog bite before being put down?” This question not only reflects a concern for safety but […]
Electrical injuries are among the most severe types of accidents, often causing lasting physical, emotional, and financial harm to victims and their families. Understanding what are the four main types […]
You may be wondering: “What is a mass tort?” These cases are unique legal actions that allow a large group of people, all harmed by the same product or action, […]
If you or a loved one has been seriously injured, please fill out the form below for your free consultation or call us at 1.937.222.2222
