Why Having Long Term Disability Insurance in A Benefit Package is So Important
By: Mary Thompson, Capstone Brokerage President, July 21, 2015
Many businesses that choose to offer their employees Short and Long-Term Disability (LTD) tend to have a better benefit package overall. A richer benefit package makes many businesses more competitive to others in their market when hiring. It also shows that the better the benefit package offered the more employees are satisfied and happy with their employment.However, with all the insurance requirements now required by the Affordable Care Act, I see less and less of our clients wanting to offer additional insurance to their employees, perhaps due to cost. Long Term Disability can replace a percentage of one’s income over a long period of time due to illness or accident.
What is Long Term Disability?
LTD insurance is a policy that protects employees from loss of income if they are unable o work due to illness or injury for an extended period of time. A Long Term Disability claim will typically require an employee to be out of work more then 90 days. The benefit amount is based on a percentage of the individual’s gross income and is paid out weekly or monthly. Long Term Disability ensures that employees are able to receive a percentage of their income when they are unable to work.
How does Long Term Disability work?
Typically, Long Term Disability will start after any short term benefits have been used. The long term claim will then be filed and may require additional documentation to prove the need for Long Term Disability. Then, just like STD, a percentage of the employees’ income will be paid out.
How long will Long Term Disability benefits be paid out?
Many policies have a limit – such as a specific amount of years for the benefits, others have an age restriction – such as to the age of 65. Some policies, however, do not have a defined period of time. Understanding what your business needs and wants are play a big role in the type of policy you should obtain.
What is a qualifying disability to receive long term benefits?
Each policy will have different conditions that need to be met to qualify. For example, some will have exclusions for certain diseases or preexisting conditions. Some will require the individual to seek employment outside of their normal field if they are capable of working in other areas. An example of this situation is someone who works in construction and needs to be physically able to work hard labor but injures their back. They may be able to take a desk job for example even if they can no longer work in the construction field. So it is important to understand the difference because it can be huge.
Why should all small and large business offer Long Term Disability insurance?
LTD is a vital part of your employee benefits package. Coupled with Short Term Disability (STD) these benefits can be crucial to employees who become disabled outside of work. Having both STD and LTD policies in place will allow some financial stability for a person who becomes disabled. Both Short-term disability and Long Term Disability are important policies to offer to employees. In many circumstances it is hard and more expensive for employees to purchase or obtain these policies on their own, making it even more necessary for employers to offer these as supplemental policies.
Long Term Disability insurance should be considered an important part of a benefits package. Many feel that have LTD is just as important as having health insurance. Employees should be sure they read the policy guidelines to ensure they meet their needs; the other option would be to purchase their own expanded coverage. Such as insurance just if you have a specific illness. A common additional coverage would be offered to insure individuals from specific illnesses perhaps that run in their families. Discuss adding supplemental policies to enhance your benefits package to better cover employees.
