Long-term Disability insurance (LTD or LTDI) provides you with a portion of your income (typically 50% - 70%, depending on your policy and profession) when a covered injury or illness prevents you from working for an extended period of time (usually after 3 to 6 months). It can provide benefits for events such as an injury or debilitating illness/disorder. The benefit period typically ranges from two to five years or until age 65, depending on the coverage options selected.
Becoming disabled can have devastating financial implications by stripping you of your ability to earn a living. While most people can afford to miss work for a few months by tapping into their personal savings, very few have the financial means to stop working altogether for an extended period of time. In such instances, this is where an LTD insurance policy can protect you and your family from potential financial ruin.
The policy holder for your disability coverage depends on the type of coverage you have. If you have group coverage that your employer selects and purchases for you, your employer is the policy holder. If you have individual coverage that you chose to purchase in the open market, you are the policy holder. The policy holder is bound by contract with the insurer and is the one who receives a copy of the actual policy.
In some cases, you may be asked to provide medical information before coverage is offered. This information about your health is referred to as "evidence of insurability." It is requested when you or your employer request coverage that is above the amount that is guaranteed without providing evidence of insurability.
If you pay your own premiums with after-tax dollars, your disability benefits will be tax-free. If your employer pays for the policy – typically with pre-tax dollars – your disability benefits will be taxed.
Musculoskeletal and connective tissue disorders – including neck and back pain, joint, muscle and tendon disorders, and foot, ankle, and hand disorders – were the leading cause of long-term disability claims in 2008, according to CDA claims data. Cancer ranked second among these primary causes.
According to U.S. Census Bureau estimates, you have a 1-in-5 chance of becoming disabled. Additionally, the Council for Disability Awareness (CDA) estimates that the average long-term disability (LTD) absence from work lasts 2.5 years. This is a long time that creates a large gap to have to meet financial obligations without a steady income. One of your greatest assets is your ability to earn an income – properly protect it and your family’s wellbeing with the LTD policy that’s tailored specifically to your needs.
To learn more about our Long-term Disability (LTD) insurance products, speak with one of our experienced professionals today.
(1) Council for Disability Awareness (CDA) 2008 Long-term Disability Claims Survey