The Long-Term Disability Insurance: Here is What You Should Know
Long term disability insurance is among the most significant types of coverage an individual can get. Mostly, accidents are not the cause of all disabilities. Pregnancies, cancer, musculoskeletal injuries, heart diseases, and more are the primary culprits of such disabilities. Therefore, you should make an effort to learn different conditions that qualify for long term disability.
Long-term disability insurance covers the portion of employee’s income (around 50-70%) when they become seriously ill or injured. It is much different from employee compensation in that it is exclusively for non-work related injuries.
When an employee cannot work for a long time, long-term disability insurance can assist in covering a portion of their salary. Long-term starts disability to run after short-term disability insurance is over. This usually happens around ten to fifty-three weeks after an eligible event.
Coverage terms and policy responsibilities
Some firms opt only to offer short-term disability policies, while others don’t offer one at all. Long-term disability is not a compulsory law by any state. Mostly, employers provide long-term disability programs that are funded mainly through third-party administrators such as insurance agents. Employers usually choose the amount of coverage to elect for their employees. Employees filings for the conditions that qualify for long-term disability coverage depends on the following terms:
- Employees have to work on a full-time basis, mostly 30 hours or more in a week.
- Employees are required to work for a certain amount of time before coverage kicks in.
- Employees must elect their benefits and contribute to the plan.
Benefits of long-term disability policy are not limited to monetary assistance. Big companies can afford different options. Some of these companies offer re-training to help those who are unable to work anymore while others tend to be more restrictive, having clauses that prevent disability for the pre-existing conditions.
Premium payments
From the definition, premiums are the amount of money paid regularly to an insurance plan. A long time ago, many firms offered rebates for long term disability. As time progresses, employers have switched to extend different options to employees for payments. Depending on the option chosen, there are various tax implications and cost associated with. These include:
- Employer-paid premiums
- Shared cost plan
- Employee paid premium
The benefit period for long-term disability insurance determines the time for which a benefit is paid for any single period of disability. Many insurance firms offer long-term disability insurance in 2-year, 5-year, 10-year, and to age 65 benefit. For this policy claim, the “to age 65” interest provides the most significant level of coverage. However, it is always essential for an employee to understand that the shorter benefits function as well.
Understanding the circumstances in which an individual may qualify for the long term liability benefits is one of the most important things an individual can do before the actual buying of the policy. The provision that describes these circumstances are called “definition of the total liability.”
Because not all disabilities are total disabilities, it is also essential to be sure your policy will pay benefits for partial disabilities as well. Partial disability is one whereby an injury or illness causes you a 20% or more significant loss of income. The provision that covers partial disabilities is known as the residual disability benefit and should also be reviewed with your insurance representative.