Long term disability (LTD) insurance is specifically meant to protect workers in the event that they become disabled before retirement. Many long term disability policies are offered through employers as part of a standard benefits package whereas some are purchased directly from insurance brokers or agents.
According to research, 3 out of every ten workers or employees between the ages of 24 and 60 will experience a serious accident or illness that will keep them out of work for 3 months or more, with almost 55% of these injuries occurring away from the workplace.
In case an employee gets hurt away from workplace, he will not be covered by the worker’s compensation. If an employee is not capable of working for a long period of time due to any form of disability, a long term disability plan can help in covering a portion of his or her salary. What you need to know about long term disability is that it usually kicks in as soon as short term disability expires.
Eligibility for Benefit:
1. Claimants must be certified as totally disabled by an approved and trustworthy physician
2. Claimants must have completed the waiting period
Who pays for the Coverage?
There are a number of choices on who can pay a long term disability policy:
1. Employer fully paid plan
2. Employee fully paid plan
3. Shared cost plan
Each payment option has its own cost and tax implications.
Employers can choose the amount of coverage to give to their employees. Most policies cover about 50 to 70 per cent of monthly salary. The duration of policy benefits can also last for a while. Some plans only manage to pay out 5 to 10 years worth of disability to qualified persons whereas some will pay out till the retirement age of 65, based on a rate schedule.
Under policy rules, claimants filing for long term disability insurance can only qualify under the following terms:
1. They must have worked for their employers for a certain period of time
2. They must be working on a full-time basis, usually 30 hours or more per week.
The long term disability policy benefits package may include:
1. Percentage of a claimant’s monthly salary paid out to a predetermined monthly amount
2. Starts between 90 and 180 days
To add on what you need to know about long term disability insurance, depending on policy terms, disabled employees may be limited to how much coverage they receive and have to choose an alternative career for which they are qualified by training, education or experience. Disabled highly skilled workers or upper management can receive policy benefits for a lifetime without switching professions.