The Importance Of Long-Term Disability Insurance
In terms of insurance policies, Long-Term Disability (LTD) insurance is a pretty low priority for most people. After required insurance policies (health, auto, home/rental), many people next look to life and personal property insurance as insurance policies to have. In fact, various insurance for non-essential items (mobile telephone and pet, to name but two examples) seem to be more popular than LTD insurance. However, a recent Social Security stat sheet shows that 25% of 20-year-olds today will incur a disability before the age of 67. As such, it is worthwhile to give LTD insurance a serious look. While some employers offer LTD insurance to their employees, all persons have the ability to purchase their own LTD insurance policies. Further, using the expertise of an attorney experienced in LTD may be helpful in understanding the details of such policies. An article on NPR’s web site discussed the importance of having LTD insurance. A general introduction to LTD insurance, as well as some aspects of LTD insurance policies to be aware of, will follow below.
Generally, LTD insurance is a form of insurance that protects a person from the loss of income suffered when he/she is unable to work due to a disability – essentially, an illness, injury, or accident – for an extended period of time. It is important to understand that LTD insurance will cover disabilities, as opposed to an accident or injury suffered while working. That situation is typically covered by worker’s compensation insurance. Generally, LTD insurance policies will provide the insured with a percentage of his/her income while he/she is unable to work. Further, most individuals covered by an LTD policy are covered as a result of a benefits program from their employer, in which case they are regulated by the federal law. However, as mentioned above, individuals may purchase a private policy, to both supplement the policy from their employer or, if their employer does not offer such a benefit, for their own peace of mind.
As with all insurance policies, there is no one-size-fits-all LTD insurance policy. Accordingly, the following are some provisions that are important to consider, based on an individual’s specific circumstances:
- Business Overhead Expense Coverage. For those that own a business or incur expenses that are not part of a regular paycheck, these provisions will insure against such costs and expenses.COLA Clauses. Such clauses mean that the payments are indexed to inflation.
- Elimination and Waiting Periods. Policies with these provisions require the insured to wait a specified period of time before receiving the first payment, and also caps the benefits to a certain amount. As with most policies, these provisions are flexible, so that if the insured is able to withstand a longer waiting period, he/she will most likely pay a lower rate.
- Future Purchase Options. These policies allow for an increase in coverage as the insured’s wages rise.
- Lifetime Benefits. These policies will keep paying until death.
- Non-Cancelable and Guaranteed Renewal Policies. Assuming the insured pays the premium on time, these policies cannot be canceled and automatically renew.
- “Own Occupation” Coverage. These policies will pay if the insured cannot perform the occupation he/she was employed as when the policy was initiated, as opposed to a policy which required the insured to take any job he/she is physically able to do.
- Retirement Protection. These policies will provide contributions to retirement savings, in addition to the normal payments.
Working with an attorney having experience with long-term disability insurance policies is a prudent choice, as they have the knowledge that will help you navigate the various aspects of the policies, including those that pay out more easily than others. As such, if you are experiencing a disability, and need to understand coverage offered by your policy, contact the experienced disability legal team at Farrell Disability Law as soon as possible. Contact our Jacksonville office today.