Long Term Disability Insurance: Protecting Your Most Valuable Asset

People are becoming increasingly aware of the importance of maintaining your most valuable asset – being able to provide for yourself and your family. Having your working capacity taken away from you can have critical effects on your life: financial, psychological and emotional ones.

That’s why it’s important to have a long term disability insurance policy. You will be able to protect your financial, psychological and emotional state even though you wouldn’t be able to continue working.

A long term disability insurance policy will protect your financial stability by providing monthly coverage as a percentage of your salary if you become disabled. These benefits last for as long as the disability lasts, regardless how long it is, so you can be assured that your savings can be kept intact and safe even if you’re unable to keep working as you did previously.

But, being able to work and provide doesn’t only protect your financial stability, but also your psychological and emotional state. Not being able to work can be a frightening situation to be in. Many worry about how they’re going to provide for their children’s schooling, how they will cover the piling medical bills, at the same time paying the utilities and rent. All these are questions that a long term disability insurance policy solves. You will have your peace of mind knowing that you’re financially safe, regardless if you will be able to work in the future or not.

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Long Term vs Short Term Disability Insurance

While long term and short term disability insurance are similar in some aspects, they are completely different in others. Depending on your personal information, your lifestyle and what you’re interested in, you will benefit more from one type of disability insurance.

Some of the main things short term and long term disability insurance are different in are the following:

The provider

First and foremost, what long term and short term disability insurance are most different in is the provider or the source through which the person gets the insurance. Short term disability insurance is most often offered as a benefit from the employer through group insurance policies, while long term disability insurance is usually bought individually to provide additional coverage or completely separate from the employer.

The duration

What separates short term from long term disability insurance is the duration of the benefits. Short term disability insurance covers injuries lasting anywhere from 3 to 6 months, after which the long term disability benefits pick up and last for the whole duration of the disability.

The coverage

The final difference in the short term and long term disability insurance is the coverage amount you would potentially receive if your policy is activated. The monthly payments you’d receive are usually stated as a percentage of your salary, and in short term disability insurance, they are usually around 70% of your salary, while for long term disabilities, they are usually around 60% of your monthly salary. This would be in reference to group long term and group short-term disability insurance and percentage depends on the specific plan the employer is offering.  Individual disability insurance plans are not based on a percentage but certain parameters that are purchased and definitions exist in the individual disability insurance policy tailored for that specific individual.

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What is Long Term Disability Insurance ?

The long-term disability insurance policy is a type of insurance people get to protect them in case if they become disabled and unable to work for a long period of time. It’s rarely offered by an employer as a benefit, so most people decide to buy a private long term disability insurance, but even if it is, many decide to get additional coverage for themselves.

The long term disability insurance policies are paid through monthly premiums that depend on the coverage, the occupation of the policyholder, their personal characteristics, as well as the coverage period. These premiums are paid on a monthly basis and depend on your personal characteristics, like your age, your job, your daily habits, your family’s medical history and even where you live at the moment. These factors don’t only change the amount of your premium, but also the coverage sum you will receive during the potential disability. 

-        If you’re wondering why people decide to get long term disability insurance, there are multiple reasons, and solid ones:

-        It gives the holder a solid source of income while they’re unable to work and earn for a living

-        Protects the worker’s well being

-        Helps cover the medical expenses related to an injury and the utility bills

-        It’s the only type of disability insurance you would need for a long-term disability

Finally, the long-term disability insurance benefits last as long as the person is disabled up to the maximum benefit period selected.

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How Long Term Disability Insurance Work ?

Long-term disability insurance protects an employee if they become disabled for a longer period of time. It starts once the short-term disability of the employee ends (usually after 3 to 6 months). The way long term disability insurance works is pretty simple and the same as the other types of insurance. Whenever you want to activate one, all you have to do is the following:

Fill out an application form:

Once you’ve chosen an insurance provider and the type of insurance you want to get, you need to fill out an application form with information on your age, occupation, medical history and a few questions about your lifestyle and habits.

Take a medical test:

As an additional confirmation of your medical state and health, you will need to take a medical test that will confirm all of this.

Pay your monthly premiums:

Once your long term disability insurance policy is formed and you’ve activated it, you need to pay the premiums for it, usually on a monthly basis.

After this, you’re officially an owner of disability insurance. If you become disabled, the long term disability policy doesn’t activate immediately. Instead, you receive your short term disability insurance benefits for the first couple of months (3 to 6 months), and after that the long term disability insurance kicks in. This means that you will receive monthly compensations for your costs as a percentage from your salary, usually around 60%. Benefits varies between disability insurance carriers.

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