Long term disability

Long term disability is an insurance type that acts as a safety net for employees suffering from problems that stop them from working long term. Although most people do not see this is as important, the fact is that long term insurance lets a person prepare for the inevitable. What the policy does is pay for the person’s salary while they are on disability. Statistics show that the possibility of being disabled long term is high especially before retirement. With the average disability spanning around 2.5 years, this is a long time to survive without any income regardless of whether someone is part of a family or not.

What Long term disability Covers

As mentioned, long term disability can span for around 2.5 years or more depending on the type of policy a person took. Keep in mind though that this is “long term” which means that it only kicks in after a specific time period has lapsed. For example, being unable to work for 25 weeks does not go under the long term disability label. Instead, it is a part of short term disability insurance which is another matter entirely. People who have both disability insurance types would find that their long term insurance would follow through once the short term ends which are roughly 7 months.

Long term disability Causes and Price

There are many reasons that could trigger long term disability insurance in people. Currently though, the leading causes include tissue disorders and cancer.

There are actually two ways to get long term disability insurance. The first one is through an individual application and the second is through a group application entered by the employer. Generally, the amount of premium paid for long term disability increases as the policy expands or becomes more comprehensive. Usually though, it would require a person roughly $300 every year in premiums – but that is for a group policy. Individual applications are subjected to different rates. As for taxes, it depends on the situation. When it is the employers that pay for the policy, there’s a chance that taxes will be deducted. However, after-tax money payments are no longer subject to tax.

How to Choose Long term disability Insurance

When choosing long term disability insurance policies though, following are some things to take into consideration.

First off is the length of long term disability coverage. Policies can extend from two years or until a person reaches a specific age. Another consideration is how the insurance company “defines” disability. There are those that require a person to be completely disabled before payments are made while other is more lenient.

For those who are worried about inflation, it is vital to get a feature that adjusts for the COLA (Cost of Living Adjustment). As mentioned previously, long term disability kicks in when short term runs out. However, those who don’t have short term disability insurance might want to specify a “trigger date” to start getting their benefits. Of course, those aren’t the only considerations one must take when choosing long term disability policies and it is important to peruse each one before committing.

Long term disability insurance