How does the Long Term Disability Insurance Policy work?

Long-term disability insurance is a type of insurance that provides income replacement for workers who are unable to perform their job duties due to a serious illness or injury for a long period of time. It is different from short-term disability insurance, which covers temporary disabilities that last for a few weeks or months. Long-term disability insurance usually starts paying benefits after a waiting period of several months, and the benefits can last for years or until retirement age, depending on the policy. The amount of benefits is typically a percentage of the worker's pre-disability salary, such as 60% or 70%. Long-term disability insurance can help workers cover their essential living expenses and protect their financial security when they are unable to work .

Long-term disability insurance can be obtained through an employer-sponsored plan or a private plan. Employer-sponsored plans are often cheaper and easier to qualify for, but they may have lower benefit amounts, shorter benefit periods, or stricter definitions of disability. Private plans are more expensive and may require medical underwriting, but they offer more flexibility and customization in terms of benefit amounts, benefit periods, and definitions of disability. Private plans are also portable, meaning they can be kept even if the worker changes jobs .

Long-term disability insurance is not mandatory, but it is highly recommended for workers who depend on their income to support themselves and their families. According to the Council for Disability Awareness, one in four workers will experience a disability that prevents them from working before they reach retirement age. Some common causes of long-term disability include musculoskeletal disorders, cancer, mental health issues, and cardiovascular diseases. Long-term disability insurance does not cover work-related injuries or illnesses that are covered by workers' compensation insurance. It also does not cover pre-existing conditions that start within the first year of the policy's effective date.

The policy offers an Accelerated Death Benefit, waiver of premium for disability, and continuation options in the event your employment ends. The AD&D plan pays a benefit in the event of death as a result of an accident. The policy also offers benefits in the event of dismemberment or paralysis as a result of an accident or injury.

Under current tax law, the value of group life insurance coverage over $50,000 is taxable income, called imputed income. Because pays for the cost of group life insurance, you are responsible for paying taxes on the value of the coverage in excess of $50,000. The value is determined from tables published by the IRS. Imputed income will be reflected on your paychecks and on your W-2 form.

Designating a Beneficiary:

You must name the person(s) or entity to receive benefits in the event of your death. The beneficiary designation applies to your Group Term Life and AD&D Insurance. Contact Human Resources to update your beneficiary information. You are able to update your life insurance beneficiary at any time throughout the year, and as many times as needed.