The SDIR integrates with programs like Social Security and workers compensation to reduce your cost of coverage, offsetting any benefits received from social plans. If you are receiving payments through one of these programs, the insurance company that provides your disability coverage will simply reduce the amount paid to you by the amount of benefit you receive through the social plan.

To give you an example, let’s say that John Doe has a disability policy with a base benefit of $5,200 and his SDIR is $1,800, for a total benefit of $7,000.  He is guaranteed to receive the total monthly amount of $7,000 but, if he begins receiving Social Security payments, his SDIR will simply be reduced by the amount of benefit he received from the SSA (Social Security Administration).  The foremost advantage of the SDIR is that, even if he doesn’t receive any payment through a social program, the disability insurance company still gives him the entire $1,800 SDIR benefit in addition to the base benefit of $5,200.

Long-term disability insurance is an important component of your overall financial plan, but be wary of the optional riders that can drive up the cost of coverage.  The Ramsey team’s advice is that, if you have a quality long-term disability plan at the right cost for you, additional bells and whistles won’t be needed. It’s also important to remember that your chance of becoming disabled is limited, so balance this expense with other priorities like term life insurance, health insurance, your retirement plan, among others.

Reviewed by Jeff Zander, CIC, CEO
Certified Insurance Counselor with more than 40 years of insurance industry experience

Jeff Zander is the fourth-generation CEO of Zander Insurance and a Certified Insurance Counselor with more than 40 years of insurance industry experience. Before joining Zander Insurance in 1986, he worked for Northwestern Mutual and Progressive Insurance. Throughout his career, he has provided counsel and guidance across multiple areas of insurance, including life insurance, disability insurance, home and auto insurance, business insurance, employee benefits, identity theft protection, and the operations of a national independent agency.

Under his leadership, Zander Insurance has earned numerous industry, carrier and workplace awards, including recognition as a Big “I” Best Practices Agency by the Independent Insurance Agents & Brokers of America and Reagan Consulting, and as a Nashville Business Journal Best Place to Work.