New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Disability and Your Finances for Lubrizol Employees

'For Lubrizol employees, personal disability insurance is a vital financial protection that provides a stable source of income to replace lost earnings due to a disabling injury or illness, unless government programs are unavailable.'

'Given the recent changes in the government disability benefits, it is important for Lubrizol employees to purchase personal disability insurance to cover their needs in case of disability due to health problems.'

In this article we will discuss:

1. The need for personal disability insurance as an alternative to government benefits.

2. Workers' compensation and personal disability insurance: What are the differences?

3. The benefits of individualizing disability insurance coverage for the needs of each person.

As a Lubrizol employee, you should be aware that the Social Security Disability Insurance program paid out $143.7 billion in benefits in 2018. However, the number of applicants every year means that the fund is expected to be exhausted by 2034 unless the government acts. Instead of turning to the government's program to help them meet their financial needs during a disability, many people protect themselves with personal disability insurance.

Disability insurance helps by paying between 50% and 70% of your salary if you become disabled due to an injury or illness. Because disability can result in two forms of financial burden, this type of coverage may be very useful. Disabled people are usually unable to work and face other costs related to their condition.

What About Workers' Comp? Most people think that workers' compensation is a kind of disability insurance. However, workers' compensation is only available to workers who are disabled in the course of their employment. If your disability was caused by a car accident or other non-work related incident, you may not be eligible for workers' compensation. We would like to remind our Lubrizol clients that every state regulates its own workers' compensation laws and payments, which means that the availability of the coverage can be very different. Especially if you have a hazardous job, you may want to find out what your state offers and then make up for the shortage. Similarly, if any of our Lubrizol clients have an active pastime that may lead to disability, it may be wise to seek additional protection.

Private disability insurance can be purchased to pay weekly or monthly amounts during a period of disability. Provided you have paid up your premiums, the benefits are not taxable income. When buying a policy you may be able to adjust coverage to suit your needs. For example, you might be able to change the benefits or the elimination period. You may decide on general protection or decide to define coverage more specifically. Some policies also provide partial disability benefits, cost of living adjustments, residual benefits, death benefits, and pension benefits.

Because the purpose of insurance is to replace income, almost everyone decides to buy coverage only during their working years. Despite reforms being made to the federal disability programs, they usually provide only a small amount of money, and one must qualify for it. For the Lubrizol employees who do not want to depend on the government for funds in the case of an accident or illness, disability insurance can be a good way to secure their income and assets.

Out of Commission:

The unemployment rate of working-age disabled Americans is 19.6%. Chart Source: ACLI Life Insurers Fact Book 2018 Administration of Social Security, 2019 Policy coverage is written by participating insurance companies. Not all states offer all policy categories and product features. Any obligations are dependent on the insuring insurance company's ability to pay claims. This information is not intended to serve as tax or legal advice. It is prohibited from use to evade federal tax penalties. After-tax investment returns could be influenced by changes in federal and state laws and regulations. Contact a tax professional or an attorney for information that is applicable to your situation.

Added Fact:

According to the Harvard Business Review, the average length of a long term disability claim is 34.6 months. This means that if a Lubrizol employee was to get a disabling injury or illness, they could be out of work for over two and a half years without income. This is the reason why it is crucial to consider the need for personal disability insurance for Lubrizol employees to ensure that they are financially secure in the event of a disability. This way, they can have peace of mind knowing that they have a safety net to turn to in the event of a disability.

(Reference: Harvard Business Review, 'The Disability Disconnect: The Workers' Compensation System Fails to Protect All Workers,' March-April 2019)

Added Analogy:

Featured Video

Articles you may find interesting:

There is no protection for disability risks if one has no financial preparation. It is, therefore, not recommended to walk the tightrope without a safety net. As Lubrizol employees, you have strived to achieve financial freedom but a disability can undo all your efforts. As a tightrope walker, the safety net gives him confidence and security, personal disability insurance gives financial security. It guarantees that if you are unable to work due to a disability, you will not be left financially vulnerable. Disability insurance provides support, which means that it helps you by paying you a certain amount of money to help you sustain your financial status. It is therefore important to take disability insurance to ensure that in case you are unable to work due to an injury or illness, your financial future is secure.

Sources:

1. Social Security Administration. Annual Statistical Report on the Social Security Disability Insurance Program, 2018 . Social Security Administration, 2019, www.ssa.gov/policy/docs/statcomps/di_asr/2018/di_asr18.pdf .

2. Fort Pitt Capital Group. 'Should You Carry Disability Insurance Beyond Age 65?' Fort Pitt Capital Group , 24 Sept. 2020, www.fortpittcapital.com/blog/disability-insurance-in-retirement .

3. Special Needs Alliance. 'An Introduction to Private Disability Insurance.' Special Needs Alliance , 2021, www.specialneedsalliance.org/the-voice/private-disability-insurance-2 .

4. Guardian Life. 'Long Term Disability Insurance vs. Social Security.' Guardian Life , 2021, www.guardianlife.com/disability-insurance/long-term/vs-social-security .

5. MassMutual. 'Disability Income Insurance Policies for Individuals.' MassMutual , 2021, www.massmutual.com/insurance/disability-income-insurance .

What are the considerations Lubrizol employees should take into account when deciding between a monthly annuity payment and a one-time lump sum payment from the BHCPP Plan? How does each option affect their overall retirement strategy, particularly regarding tax implications and cash flow management?

Monthly Annuity vs. Lump Sum Payment: Lubrizol employees choosing between a monthly annuity and a lump sum payment should consider their personal financial needs, tax situation, and cash flow. The lump sum payment offers a one-time cash amount that can be invested or used immediately but could be subject to higher taxes if not rolled over properly. On the other hand, an annuity provides steady income for life, which may be beneficial for long-term cash flow management. Consulting a financial advisor is crucial to determine the best option based on individual circumstances(Lubrizol_11_1_2022_Lump…).

In what ways do early retirement age milestones affect the value of retirement benefits for Lubrizol employees? Specifically, how do the age thresholds of 55 and 62 impact the reduction of benefits, and what strategies can employees employ to maximize their benefits around these key ages?

Early Retirement Age Milestones: Retirement age milestones, particularly 55 and 62, play a significant role in determining benefit values. At age 55, employees with 10 years of service receive a partially subsidized early retirement benefit, reducing the financial penalty for early retirement. At age 62, employees qualify for a full early retirement subsidy, which significantly boosts benefit value. Employees should consider these age thresholds when planning their retirement strategy(Lubrizol_11_1_2022_Lump…).

How does the current interest rate environment influence the lump sum value offered to retiring Lubrizol employees? Can you elaborate on how employees can use the pension modeler to forecast the potential financial outcomes of their lump sum offer in relation to interest rate changes?

Interest Rates and Lump Sum Value: The lump sum value for Lubrizol retirees is heavily influenced by the Federal interest rates. As interest rates rise, lump sum payments decrease, and vice versa. Employees can use the pension modeler provided by Lubrizol to forecast how interest rate changes will affect their lump sum payment. This tool allows employees to simulate different scenarios based on their planned retirement dates and interest rate assumptions(Lubrizol_11_1_2022_Lump…).

What resources and tools does Lubrizol provide to help employees understand the implications of their retirement benefits? Additionally, how can employees utilize Empower's financial planning team to align their retirement savings and pension benefits with their long-term financial goals?

Resources for Retirement Planning: Lubrizol provides several resources to help employees understand their retirement benefits. These include the pension modeler, which simulates retirement scenarios, and access to Empower’s financial planning team. Employees can use these tools to align their retirement savings and pension benefits with long-term goals and gain a clearer picture of what retirement may look like(Lubrizol_11_1_2022_Lump…).

In the context of the BHCPP Plan, what are the steps Lubrizol employees should follow to ensure they receive the correct retirement kit and benefit calculation based on the upcoming interest rates? What are the key deadlines and documentation required for making an informed decision?

Steps for Accurate Retirement Kit and Benefit Calculation: To receive the correct retirement kit and benefit calculation, Lubrizol employees need to request a retirement kit from the BHCPP Pension Service Center before key deadlines. For example, those targeting a benefit commencement date of December 1, 2022, must request a kit by November 1, 2022. Using the pension modeler can also help employees estimate their lump sum based on upcoming interest rates(Lubrizol_11_1_2022_Lump…).

How do Lubrizol's retirement benefits integrate with Social Security and other personal savings an employee may have? What should employees consider when evaluating their total retirement package, and how can they effectively project their income in retirement?

Integration with Social Security and Other Savings: Lubrizol’s retirement benefits should be considered alongside Social Security and personal savings. Employees can model their total retirement income using Empower's tools, which include data from their pension and 401(k). It's essential for employees to project their income from all sources to ensure financial stability in retirement(Lubrizol_11_1_2022_Lump…).

How does the pension modeler work for Lubrizol employees, and what unique features does it offer to help in planning their retirement? Can you discuss specific scenarios that employees might model, such as varying retirement dates or different financial assumptions?

Pension Modeler for Retirement Planning: The pension modeler available to Lubrizol employees is a powerful tool that allows them to simulate different retirement scenarios, including varying retirement ages and financial assumptions. Employees can model up to three scenarios simultaneously, enabling them to make informed decisions about the timing of their retirement and the potential financial outcomes(Lubrizol_11_1_2022_Lump…).

What information should Lubrizol employees gather prior to consulting with personal financial planners or the Lubrizol-sponsored CFPs? How can being well-prepared enhance the quality of advice and strategies received during such consultations?

Preparation for Financial Planner Consultations: Prior to consulting with financial planners, Lubrizol employees should gather comprehensive details about their personal financial situation, including monthly income, savings, expenses, and retirement goals. Being well-prepared will enhance the quality of advice they receive and enable more effective retirement planning(Lubrizol_11_1_2022_Lump…).

Can you explain the impact of Federal interest rates on the calculation of lump sum payments for Lubrizol retirees? How frequently are these rates updated, and where can employees find the most recent data relevant to their retirement planning?

Impact of Federal Interest Rates on Lump Sum Payments: Federal interest rates, updated annually in October, significantly affect the calculation of lump sum payments for Lubrizol retirees. These rates are used to discount future annuity payments to present value. Employees can find the latest interest rate data on the IRS website or through Lubrizol’s pension modeler(Lubrizol_11_1_2022_Lump…)(Lubrizol_11_1_2022_Lump…).

How can Lubrizol employees contact the BHCPP Pension Service Center for further assistance regarding their retirement benefits? What specific information should they have on hand to facilitate a productive conversation about their retirement options? These questions are designed to provide depth and complexity, encouraging detailed exploration and resources related to the retirement process for Lubrizol employees.

Contacting the BHCPP Pension Service Center: Lubrizol employees can contact the BHCPP Pension Service Center at 877-459-2403 for assistance with retirement benefits. To have a productive conversation, employees should have their retirement kit request details, planned retirement dates, and personal financial information readily available(Lubrizol_11_1_2022_Lump…)(Lubrizol_11_1_2022_Lump…).