Long term disability is a type of insurance designed to cover you in the event you are unable to work and to replace your lost wages. Group policies governed by ERISA law and private individual disability policies are both designed to protect your income in the event that you are unable to work due to sickness, injury or an accident.
Usually, these policies pay approximately 60% of your earnings. There is also usually built in elimination or waiting period where the benefits are not payable until a certain period after you stop working, usually after you’ve been unable to work for 90 or 180 days. A separate insurance policy for short term disability benefits is typically used to pay disability benefits until long term disability benefits kick in.
Why You Should Consider Long Term Disability Insurance
The United States Census Bureau has indicated that you have a 1 in 5 chance of becoming disabled before retirement age. In 1997, the Census Bureau issued the results of a study showing that more than a 152,000,000 people between the ages of 21 and 64 (which is a prime working-age for most Americans) have some form of disability. As such, this is a particular area of concern—not only for employees—but also for self-employed men and women who should seriously consider having a long term disability policy.