Long Term Disability Insurance
No one wants to experience a severe injury or illness. However, if you were to experience one unexpectedly, you are probably prepared for the medical expenses associated with it. Most people have health insurance in such an event, or life insurance if the injury or illness proves fatal. But what if, for instance, your injury or illness leaves you with a long term disability that keeps you from working? Not many people are prepared for this type of circumstance, and the results can be devastating. Even if you can get by for a few months without working, the loss of wages associated with a long term disability can wreak havoc on your familys finances.
Benefits of Long Term Disability Insurance
This is where long term disability insurance comes in. Long term disability insurance is a lot like short term disability, but long term disability benefits provide you with income for a longer period of time. A typical term for long term disability insurance can be two years, five years or even until your retirement age, depending on what type of policy you have. Most people who have long term disability are insured through through their employers – however, it’s possible to buy long term disability insurance as an individual.
How Long Term Disability Insurance Works
Typically, long term disability insurance kicks in after your short term disability term expires, usually around three to six months. At this point, your long term disability policy will pay you a percentage of your most recent salary. This percentage is typically somewhere between 50% and 66%, depending on your policy.
The annual premium for a group insurance policy (such as one that would be provided to you by an employer) is usually substantially cheaper than an individual policy that you purchase on your own. However, if you buy your own policy and pay your own premiums with after-tax dollars, your disability benefits are not taxable. Talk to your local insurance agent or your employer to choose the best long term disability insurance policy for your