All You Need to Know About Long-term Disability

Life is quite unpredictable. You cannot anticipate a severe injury or illness that might prevent you from going to work. This can be quite traumatic for you and your loved ones. It poses many questions like how you will manage your bills and daily expenses. Long-term disability (LTD) insurance will be your savior here. LTD provides financial assistance in case you are out of work due to your health issues for more than 12 months. These policies can be purchased as a group plan through an employer or bought from the open market. Want more details? Get in touch with the law office of Nancy L. Cavey

How does LTD insurance work?

LTD insurance works like a typical insurance. The policyholder makes recurring payments on a monthly basis. In case of a serious injury or illness that prevents you from working for a prolonged time, the insurance company pays you the long-term disability benefits. Every LTD insurance mentions the benefit amount and period, the definition of disability, the premium amount, and the elimination period. The benefit amount is how much long-term disability will pay you monthly if you become disabled. 

How much does it pay?

The long-term disability policy benefit amount determines the monetary benefits that you will receive if you become disabled. The benefit amount is usually a percentage of your income. Generally, it replaces anywhere from 60-80 percent of your income before the injury. 

What conditions qualify for LTD?

Medical conditions that meet the criteria mentioned in the Social Security Act definition of disability are eligible for long-term disability. Disability means a physical or mental condition that lasts for 12 months or more. The main causes of long-term disabilities are cardiovascular disorders, cancer, mental disorders, auto-immune disorders, neurological disorders, and musculoskeletal disorders.

Are long-term disability benefits taxable?

Whether you have to pay taxes on long-term disability or not depends on if your premiums are paid with before-tax or after-tax dollars. If you pay your own premiums with after-tax dollars, then your benefits are not taxed. If you or your employer pay premiums with before-tax dollars, then your benefits are taxed. If the employer pays a part of the premium, then you are taxed on the portion that your employer has paid. 

Signing up for long-term disability is a wise decision. It secures your future in the event of an injury or illness. Long-term disability coverage gets expensive with age. Therefore, buy your long-term disability policy today so that it will not be too late to get covered and secure your loved one’s future.