Some of the leading causes of long-term disability claims come from common medical problems that force many people out of the workforce. Some of these long term disability claims come from illnesses or disabilities such as cancer, complications from pregnancy, back injuries and cardiovascular problems.
What is long term disability insurance?
Long term disability insurance will give you income when short term disability insurance stops and you still cannot go back to work as a result of your disability. Most long term disability policies will pay benefits until you reach age 65, but you may choose the length of time your policy pays. The longer the time you choose to have benefits, the higher your premium.
The long term disability policy will cover a certain percentage of your income at the time you buy the policy. The payments you will receive on your long term disability will usually be figured by a combination of what you can receive from government benefits, your savings and outside sources. Long term disability insurance will usually pay about 50 to 70 percent of your salary at the time you purchase your policy.
How do I get long term disability insurance?
Many employers offer long term disability insurance to their employees. If this is not the case, you may need to look for an individual long term disability insurance policy.
If you get your long term disability coverage through your employer, look at who pays the premiums. If you pay the premium with your own money after taxes, your long term disability benefits will be tax-free. If your employer pays your long term disability premium, they will most likely be paying with money before taxes and you will probably be responsible to pay taxes on your long term disability benefits.
Many times, insurance companies will give premium breaks to employers who have their employees to come back to work part time, even after they have been disabled. This saves the insurance company money on long term disability benefits, because they will not have to pay you, the employee, as much in benefits anymore because they balance the amount you make in your new job with the long term disability benefits they pay.
If you cannot get long term disability coverage with your employer, or you feel you need more coverage than you can obtain from your job, you should look into an individual long term disability insurance policy. Usually, life insurance agents will have information about personal disability insurance.
Unfortunately, personal disability insurance policies are going to be more expensive than the group policies offered by your employer; but if you shop around, you should be able to find a policy that is a good buy.
You will have to undergo a medical exam to prove your insurability, and the price and extent of the coverage will be decided based on your medical condition, age, job, annual income and savings.
What to look for
On any short or long term disability policy, find out how they define a disability, how the policy is renewed, when and if premiums will be waived, when the benefit payments will begin, if the policy has a cost-of-living adjustment, and how long you will be covered or receive benefits.
By D. Blair Thompson