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What is Long Term Disability Insurance, and Why Do I Need It?

What is a long term disability?

A long term disability is one where a physician determines that you are unable to perform the essential tasks of your job due to illness or injury.

Don’t Social Security Disability (SSD) and Workers Compensation cover long term disability?

The government Social Security Website (ssa.gov) provides the following information:

Although Social Security disability benefits and workers’ compensation are the nation’s two largest disability benefit programs, the two programs are quite different. Workers are eligible for workers’ compensation benefits from their first day of employment, but Social Security disability benefits are paid only to workers who have a substantial work history. Workers’ compensation provides benefits for both short-term and long-term disabilities and for partial as well as total disabilities. These benefits cover only disabilities arising out of and in the course of employment. In contrast, Social Security disability benefits are paid only to workers who have long-term impairments that preclude any gainful work, regardless of whether the disability arose on or off the job. By law, the benefits are paid only to workers who are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that is expected to last at least a year or result in death. The impairment has to be of such severity that the worker is not only unable to do his or her previous work but is also unable to do any other type of substantial gainful work. Social Security disability benefits begin after a 5-month waiting period.

Workers’ compensation provides benefits to workers who are injured on the job or have a work-related illness. Benefits include medical treatment for work-related conditions and cash payments that partially replace lost wages. Temporary total disability benefits are paid while the worker recuperates away from work. If the condition has lasting consequences after the worker heals, permanent disability benefits may be paid. (www.ssa.gov/policy/docs/ssb/v65n4/v65n4p3.html)

What if I cannot work, but SSD or Workers’ Compensation does not provide enough income to provide for my family and myself?

A long term disability policy can help make up the difference in income. No long term disability policy will replace 100% of your income (this might remove an incentive to return to work), but LTD can supplement any government benefits.

How much of my income can a LTD policy replace?

Many policies from employers replace up to 60% of lost income (after SSD or Workers’ Comp benefits). Individual policies can cover up to 70 or 80% of your income. Policies from employers may have a benefit cap. So, even if you are covered at work, you may wish to supplement your work policy with individual coverage to protect yourself and your family. If you are self-employed, you should definitely have LTD coverage in case you are permanently unable to work.

How can I find out how much LTD coverage I need?

SmartMoney.com has an online calculator that can help you determine how much coverage you need and what it might cost. (www.smartmoney.com/Personal-Finance/Insurance/How-Much-Disability-Insurance-Do-You-Need-9711)

What do I do if I need to file a claim?

It is always to your benefit to have a professional legal team on your side to help you negotiate the complexities of LTD claims.