Long Term Disability – Overview
A long term disability is a type of illness or injury. With a long term disability, a person will not be able to work for longer. This time can last for a few years, sometimes even longer. With long term disability insurance, that person may receive a portion of their actual income.
This can help the policyholder deal with everything without income for the length of their disability period.
What Is Long Term Disability?
Long term disability can occur due to different reasons. When a person is unable to work for a more extended period due to some chronic health issues or injuries, it is called a long term disability. People with long term disabilities can get multiple insurance benefits. It can help a disabled person to deal with their life situations without a steady income.
Long Term Disability Insurance
Long term disability insurance can offer multiple benefits to help you deal with different situations. For example, it can pay you around 50 to 70% of your actual salary if you cannot work for a more extended period due to an injury or a chronic illness.
You can start receiving these benefits after your short-term disability ends. After your initial incapacitating event, the long-term disability typically begins ten to fifty-three weeks later.
The length of your long-term disability coverage can last for five to ten years or until that person turns 65. However, it also depends on specific policies.
Some Examples of the Long Term Disability
Here is a list of different conditions that can qualify a person to receive long term disability coverage.
- Mental health problems
- Any injuries due to an accident
- Carpal tunnel syndrome
- Brain injury
- Chronic pain
- Chronic illnesses
- Orthopedic injury
- Neurological disease
- Psychological conditions like anxiety, depression, etc.
How Long Can a Long Term Disability Last?
Long term disability generally lasts until the person is ready to resume his professional life. However, it also lasts until that person is 65 years old, which is the end of the coverage period of their insurance.
To receive all the benefits of long term disability insurance, a person needs to meet the criteria of being totally disabled. Most insurance policies can offer different benefits for two years if the individual cannot return to his or her old occupation because of a disability.
After two years, if the person is still unable to do any job because of their disability, they will continue receiving long term disability benefits.
4 Different Types of Long Term Disability Insurance
There are different types of long term disability insurance plans.
1. Employer-Provided Plan
The first one is the employer-provided plan. With this policy, the individual will receive up to 70% of their old salary. Their salary will not include any commission or bonuses. This policy comes with a financial cap on the total number of years covered or the total amount of pain.
2. Employee-Paid Plan
The next one is the employee-paid plan. With this plan, the employers can be considered a facilitator. They connect employees to an insurance plan of any insurance company. However, they do not pay the cost of this plan.
In this case, the employee’s contribution is deducted monthly from their salary. It is often similar to a traditional health care plan. The employees can customize all the terms and conditions through riders. They can add specific plan coverage according to their preferences.
Another insurance plan is a shared cost plan. Here, the employees and employers contribute to covering their coverage plan’s cost. Both parties have options to split the overall cost of a given plan. They both can make monthly contributions to this cost.
However, the employer can also cover the lower coverage amount and the basic plan. In this case, the employees must pay for the higher coverage plan to cover their insurance. This higher coverage amount can be framed with the number of years of your policy or the annual financial cup.
4. Government-Supported Plans
Different government-supported plans are available in the market, including Social Security Income (SSI) or Social Security Disability Insurance (SSDI). These two are the long term disability benefits that the federal government generally offers.
SSDI is only available for people who can work and contribute a certain amount through income taxes. SSI is available for low-income people who could not work or contribute enough through income taxes to be eligible for SSDI.
Different Criteria Can Differ Long Term Disability Plans
- Rate of cost for coverage
- Number of years required to redeem the plan
- Qualifying events or Eligibility conditions
- The total amount of the financial coverage, whether as a percentage of the salary or as the dollar amount.
- If it includes any retirement protection like savings account contributions, IRA, or not
- Whether it includes a cost-living adjustment or not
The long term disability is basically the inability to work for a longer period due to some physical injury or acute illness. Long term disability insurance can offer these people multiple benefits and help them deal with their life events without a steady income.
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