Long Term Disability (LTD) insurance helps replace income for an extended period of time, usually ending after five years or when the disabled person turns 65. The LTD benefit is typically a percentage of salary. It is not intended to totally replace an employee’s income, but provide income to help meet their financial obligations until they are able to return to work.
The LTD plan will have a benefit waiting or elimination period. This time period will be much longer than for STD claims, typically 90 or 120 days. If an employer offers both STD and LTD insurance, the two programs will coordinate so there is no gap between the STD and LTD benefits. There may be some specific provisions within the policy that allow for cost of living adjustments or “own occupation” provisions. Refer to your insurance company to determine if these features are included.
The duration of the LTD benefit will vary based on the policy specifics. The most common durations are for a fixed number of years – 5 or 10, or until normal retirement age.
Disability benefits are typically coordinated with worker’s compensation claims and/or Social Security payments, if appropriate. For more details on the coordination, please refer to the insurance company.