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A Comprehensive Guide To Long-Term Disability Insurance

Employers offer various benefits and insurance policies to protect their employees. Some of them include health insurance, vision insurance, and disability insurance. Disability insurance is of two types: Short-Term Disability (STD) and Long-Term Disability (LTD) benefits. While Short-Term Disability insurance offers compensation for a limited time, Long-Term Disability Insurance provides income replacement for an extended period.

More about Long-Term Disability Insurance

Long-Term Disability insurance offers compensation or replaces income for those employees who are disabled and unable to work for 6 months or longer duration . The insurance covers only specific disabilities such as injuries, illness, or accidents that occurred on or off the job. Some of the common types of conditions covered include:

  • Sprains and strains
  • Stroke 
  • Pregnancy complications
  • Pneumonia 
  • Muscle and tendon issues 

Long-Term Disability insurance has two categories: own and any occupation policy. Under the “own occupation,” an employee should be unable to perform duties of his/her chosen job or job he/she is trained for. Under “any occupation,” benefit is given to those employees who cannot perform any job. 

Long-Term Disability policy usually begins after Short-Term Disability insurance has been exhausted. That is, it starts about 10 to 53 weeks post the injury or illness, with an average time of 26 weeks. 

The duration of the coverage may vary with the provider. Some may provide coverage for 10 years, while others pay until the age of 65. 

Eligibility Criteria For A Long-Term Disability Insurance

You should meet several requirements to qualify for a Long-Term Disability insurance policy. They include:

  1. You must be a full-time employee
  2. You must work for a minimum of 30-35 hours per week
  3. You have to exhaust paid sick leaves before applying for Short-Term Disability policy and you must exhaust it before filing for Long-Term Disability insurance 

How Much Does A Long-Term Disability Insurance Pay?

The long-Term Disability insurance policy usually provides 50% to 60% of the pay to qualified disabled employees. The amount is calculated depending on your basic compensation before the disability. 

How To Apply For A Long-Term Disability Insurance?

Filing for Long-Term Disability insurance includes the following steps.

1. Request An Application Form

You can collect the application form from your employer. If your employer fails to provide the form, you can contact the insurance provider and request an application form.

2. Fill The Application Form

Enter name, social security number, address, contact information, date of occurrence of injury or illness, the reason for disability, and other details without which your application may be rejected. 

3. Get the Employer’s Statement

The application procedure includes a section that must be completed by your employer. After entering the necessary details, request your employer to complete the form. Your employer would be required to provide the last working date, earnings, date of occurrence of injury, etc. information.

4. Collect Statement From Your Doctor

Besides your employer, your doctor is required to provide certain information. This includes diagnosis, objective findings, types of treatment, an estimate of physical or mental limitations, etc.

You can also submit medical records and other documents that prove your disability. 

How Does A Long-Term Disability Insurance Work?

To collect benefits you have to remain disabled for a period between the date of occurrence of disability and the payment starting date. Usually, these periods range from 30 to 90 days. Note that you will have to pay bills from your pocket until the coverage begins. 

Once your disability claim is approved, you can collect your monthly benefit for the duration of the defined “benefit period.” Companies may provide benefits for as short as 2 years or till your retirement age. 

Can You Collect LTD Benefits If You Are Returning To Work?

You can continue to collect your LTD benefits while returning to work, however, the extent of coverage depends on the type of LTD policy (own or any occupation) and terms and conditions of your insurance provider. 

Final Words

LTD insurance is not a mandated requirement in any state. Employers can decide whether to give benefits to their employees or not. They can also choose the coverage range and insurance provider.  

If your employer is not providing LTD benefits, you can check with any third-party insurance provider and buy a policy. 




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