Pre-disability earnings in a long-term disability claim refer to the amount of income that an individual was earning before they became disabled and unable to work. Pre-disability earnings are a crucial factor in determining the amount of benefits an individual may receive under a long-term disability policy.
The insurance company uses pre-disability earnings to calculate the benefit amount payable to the insured. Typically, the policy will specify a percentage of pre-disability earnings that the insurer will pay out as a disability benefit. This percentage is typically around 60% of pre-disability earnings, but it can vary depending on the policy.
For example, suppose an individual was earning $5,000 per month before becoming disabled and the policy pays a 60% benefit. In that case, the individual would receive $3,000 per month in disability benefits.
It is important to note that not all sources of income count as pre-disability earnings. The policy will specify what types of income count as pre-disability earnings. For instance, bonuses, commissions, and overtime pay may or may not count as pre-disability earnings, depending on the policy.
Overall, pre-disability earnings are an essential factor in determining the amount of benefits payable under a long-term disability policy, and it is crucial to review the policy carefully to understand how pre-disability earnings are defined and calculated.