Things to Know About Long Term Disability Insurance Policies
Long-term disability (LTD) insurance provides income replacement if you become unable to work for an extended period due to illness or injury. While short-term disability typically covers weeks or months, LTD coverage often lasts years—or even until retirement age—depending on the policy. Mark E. Snapp & Associates provides long term disability insurance in Canton, OH, West Palm Beach, FL, New Philadelphia, OH, Vero Beach, FL, Palm Beach, FL, Martingsburg, WV and surrounding areas.
- Definition of Disability
Policies differ in how they define disability. Some use an “own occupation” definition, paying benefits if you can’t perform your specific job. Others use an “any occupation” definition, paying only if you can’t work in any job suited to your experience and education. This distinction affects eligibility.
- Benefit Amount and Duration
LTD benefits usually replace 50–70% of your pre-disability income. The benefit period may be two years, five years, or up to age 65. Longer benefit periods generally cost more.
- Elimination Period
This is the waiting period before benefits start—commonly 90–180 days. During this time, you may rely on savings, sick leave, or short-term disability coverage.
- Non-Work-Related Coverage
LTD insurance often covers both on- and off-the-job illnesses or injuries. However, workplace injuries may be covered first by workers’ compensation.
- Offsets and Other Income
Many LTD policies reduce your benefit if you receive income from other sources, such as Social Security Disability Insurance (SSDI), workers’ compensation, or certain pensions.
- Pre-Existing Conditions
Policies may exclude disabilities related to medical conditions diagnosed or treated within a set period (often 12 months) before coverage begins.
- Premium Payments
If you pay premiums with after-tax dollars, your LTD benefits are usually tax-free. If your employer pays with pre-tax dollars, benefits are typically taxable.
- Additional Provisions
Some policies include rehabilitation benefits, partial disability coverage, or cost-of-living adjustments (COLA) to keep up with inflation.
Bottom line: LTD insurance can be a financial safety net during life-altering health events, but policy terms vary widely. Reading the fine print—especially definitions, exclusions, and benefit coordination rules—is essential to ensure the coverage meets your needs.
Should you have any questions, feel free to give us a call.