Before you finally settle with any particular insurance company for your LTD insurance, you need to understand what they have to offer and how much benefit you stand to gain from them.
The following are things you should look out for:
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1.The length of your coverage. Usually LTD insurance coverage ranges from two to five years, to retirement which officially is 65 years. The longer years your coverage pays, the higher your premiums.
2.When Payments begin. You can decide to wait to start getting your disability benefits, anywhere from the first 31 days after disability to six months. The longer you opt to wait the lower your premium.
3.Inflation. You have to consider inflation when buying an LTD insurance policy. You can buy additional Cost-of-Living-Adjustment (COLA) to your basic policy. This increases your payout by 4-10% each year.
4.Payment Trigger Date. Some policies would allow you top choose your waiting period. This you have to do at the time of your application.
5.Residual Benefits. This is the payment that helps you make up your income if you are still able to work but you are limited in your activities by your disability. For example if you used to work as a crane operator and you earned $450,000 per annum and you had an injury that restricted the use of your legs and you were assigned to a desk job that pays you about half of your annual income ($250,000 P.A), the residual benefit would pay the difference.
6.Extent of Disability. Most policies would not pay any benefit until it is proven that you have total disability. Some policies would pay for partial disability but only for a brief period of time.
7.Definition of Disability. You have to really be sure that you understand what your policy defines as disability. Some policies define disability as the inability to work in your professional capacity. That is only if you cannot carry out the responsibilities of your normal occupation. Others define disability as when you cannot work at all.
8.Presumptive Disability. This is defined as when you can still work but have lost the use of some organs in your body like eyes, tongue, ears and limbs.
According to the U.S. Census Bureau, each individual has a 1 in 5 chance of becoming disabled at some point in life. Moreover, the Council for Disability Awareness says the average long term disability benefits last for only 2.5 years, which can leave people without a steady income for a long period of time. Emotions run high when an injury results in disability. Not only does the individual worry, "How am I going to pay for my medical treatment," but they also worry "How will I afford the time off from work?" The good news is that many people are eligible for disability income insurance, which can help them get by.
When you are sick or injured, you will first begin by filing for short term disability insurance, which will cover you for a few weeks or up to six months. Once your short term benefits expire, your long term disability benefits will kick in. Each month, you will receive a flat-rate percentage of your income, which is usually around 50 to 60%. The best policies can provide as much as 80% and will pay cost-of-living adjustment increases over the years to keep up with inflation. Your benefits can be paid for 2 to 5 years or until you're 65, at which time you will be eligible to apply for Social Security.
Ideally, a person would use their long term disability benefits as a supplement, while they continue to work part-time, perhaps performing different duties than they're used to. As an incentive, many insurers offer employers reduced premiums if they allow workers to return in some facet. Insurers may also cover child care expenses during that time to encourage new mothers to return to work at least part-time. However, working is not always possible, particularly for debilitating injuries or illnesses like cancer. One in seven people can expect to be off from work for five or more years before retiring, according to the Council for Disability Awareness.
Long term disability benefits vary depending on which policy has been purchased, so you should check with your employer to determine whether that arrangement is suitable or whether you need to purchase individual insurance. For instance, some policies pay disability insurance claims if you can't perform your old job tasks (partial disability), while others only cover you if you can't work any job at all (total disability).
Some policy options include "residual benefits," which makes up for lost income if you can still work but not perform all your normal tasks. Some policies also offer cost-of-living adjustments, which increases payouts from Long-Term Disability Lawyers 4 to 10%. You may have a waiting period of as short as 90 days or as long as six months before you are allowed to collect. Also, the length of coverage may last anywhere from two years to five years, or until your turn 65 and can apply for Social Security benefits.