§5.12 Private Disability Benefits

When private disability insurance was purchased with community funds, you must [Marriage of Saslow (1985) 40 C3d 848, 860–861]:

• Treat the disability benefits as separate property if they are intended to replace postdissolution earnings that would have been the separate-property income of the disabled spouse, and
• Treat the disability benefits as community property insofar as they are intended to provide retirement income.

You may consider testimony of the spouses' intent, both at the time the disability insurance was originally purchased and at the times that decisions were made to continue the insurance in force rather than let it lapse. Absent evidence of actual intent, you may ascertain a normal retirement age at which the disabled spouse would have been most likely to retire had no disability occurred. [Marriage of Saslow, supra, 40 C3d at 861.]

If disability insurance is originally purchased during the marriage but renewal premiums are paid after separation, the disability payments are entirely separate property. The renewal premium will not have been paid "during the marriage with community funds" and with the intent of providing community retirement income. [Marriage of Elfmont (1995) 9 C4th 1026, 1034-1035.]