Long Term Disability Insurance

Long Term Disability Insurance – Overview

Long term disability insurance is a policy that pays the monthly policyholder benefits and replaces a large portion of their previous income. You can only apply for this insurance if you cannot work for long due to an injury or chronic illness. It is always a smart investment for healthy individuals to have a secure and safe financial future.

How Does Long Term Disability Insurance Actually Work?

Long term disability insurance works like any other insurance plan. The policyholder has to make monthly recurring premium payments. However, your insurance carrier will pay you long term benefits that can help you financially when you cannot work due to a disability.

Some important facts that can vary among different long term disability insurance policies:

  • The benefit amount or the amount that you will get from the policy on a monthly basis if you are disabled
  • The benefit period or the time that your disability benefits will last
  • The elimination period or the time you need to wait for your long-term benefit to start after a disabling event
  • The definition of disability, according to your policy or the conditions that your policy will and will not cover.
  • The premium amount or the insurance cost annually or monthly.
Long Term Disability Insurance

How Does Long Term Disability Insurance Work?

How Much Does the Insurance Pay?

The policy benefit amount can determine how much they will pay you if you become disabled. In most cases, you will receive a percentage of your income before becoming disabled. However, the disability benefit amount depends on the policy you choose. These long term disability insurance policies will pay 60 to 80 percent of your previous income.

When Does Long Term Disability Insurance Kick In?

You can start receiving long term disability benefits after your application gets approved by the insurance company. Once you accept the offers of your policy, you can start paying your premiums.

Your policy’s elimination period can determine when the disability benefits will kick in if you become disabled. You can also call this time the waiting period. It can help you determine the time you have to wait before you start receiving the benefits after becoming disabled. The waiting period can last from 30 days to 365 days when you apply for long term disability policy coverage.

Do You Need to Pay Back the Insurance Benefits?

Typically, there is no need to pay back the benefits of private long term disability insurance. You can treat these benefits as tax-free income. This is because you have earned these benefits by paying premiums. However, there is a slight probability that you may have to pay a portion of your benefits.

By law, you are always permitted to collect benefits from the government and a private insurance company. The collected amount of SSDI or Security Disability Insurance benefits can be deducted from the amount you receive from the private insurance company.

It is not easy to get approved by SSDI. Once you get the approval, you may still have to wait months, sometimes even a year, to receive the benefits. The SSDI benefits often begin with a catch-up payment. It is an amount that can make up for the time of review of your SSA application.

Private long term disability insurance is more straightforward. It does not take much time to get approval. The company also starts to pay the benefits as soon as they select you for their program.

What Does the Long Term Insurance Cover?

Long term disability insurance generally offers employees financial help after their short term disability insurance ends. The short term disability insurance benefits often expire after three to six months. Some long term disability policies offer benefits to a disabled person for two to ten years. Other policies deliver benefits until that person is 65 years old.

Every long term disability insurance policy has different conditions for excluded diseases, pre-existing conditions, and the payout. In addition, multiple other conditions can make a policy less or more beneficial for the individual.

Long term disability insurance is a component of a comprehensive benefits package for the employee. According to the experts, it is equally important as any other life insurance policy.

Employees should ensure that their chosen policy can meet all their needs. If not, the employee can always purchase expanded coverage according to their preferences. It can be available at a reduced rate through the employer’s insurance carrier.

Here is a list of the primary conditions that can support your long term disability claim.

  • Cancer
  • Pregnancy
  • Mental health issues like anxiety and depression
  • Musculoskeletal disorders
  • Injuries like sprains, fractures, muscle strains, and ligaments

When collecting benefits for an injury or a chronic illness, your condition can define the amount you receive. For example, some policies will offer a monthly payout when you cannot work a job due to an injury. However, some of these policies can allow you to do other work. Other policies may only allow you to work in some type of profession, even if you are not earning much.

The definition of a policy is entirely based on your capacity to do a job. You may need help to work in a specific profession. However, you can do some other work. Some conditions can allow you to do a certain type of job. However, some severe conditions can prevent you from doing any job.


Long-term disability insurance generally provides multiple benefits to people who are unable to work for an extended period due to injuries or illnesses. Every insurance policy has different conditions and offers various benefits. Before choosing an insurance policy, you must figure out if it matches all your needs.

See Also

Coinsurance vs Copay

Dental Insurance for Senior Citizens

NSO Insurance

Signs That You Will Be Approved for Disability

What is Social Health Insurance?

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