Group LTD: What Is Long-Term Disability Insurance?
Dan Levenson December 03, 2015
Many make the mistake of believing that a disability is caused by an accident or by being reckless. This isn’t always the case.
A disability can definitely be caused by an accident, sure, but it can also be caused by an illness or medical condition that the individual develops. Unfortunately, neither an employee or an employer can plan for an individual to become disabled.
This is one reason that offering long-term disability insurance to your employees is so important.
When an employee becomes disabled, they are likely faced with quite a bit of financial strain. This is because they are no longer able to complete their typical, day-to-day tasks at work. An employer will also face strain when an employee becomes disabled, however. For example, they will miss out on the work that the employee normally completes and may struggle to find a replacement for the employee.
What is Long-Term Disability?
When referring to the work environment, a long-term disability usually means that the person is no longer able to work for an extended period of time. Usually this timeframe is longer than 6 months. Many times, a long-term disability could result in the individual permanently being unable to work.
Preparing for Long-Term Disability
If you are looking for a way to help your employee prepare for a time when they may become disabled, one of the best things you can do is offer long-term disability insurance. There are several ways you can offer this benefit to your employees.
Some employers choose to pay for the entire premium for their employees. However, others prefer to share the cost of the premium or require their employees to pay for the entire amount. Choosing the right option depends on the specific company and employees in question.
Each plan works a little differently. On average, these types of insurance plans will pay between 50 and 70% of the individual’s monthly salary. This payment will continue for an extended period of time, depending on the plan itself. Some plans cover the employee for a certain timeframe, usually between 5 and 10 years, and others pay until the person reaches the age of 65.
What Rules are in Place
As with other types of insurance, there are certain terms regarding when an individual qualifies for long-term disability. For example, it is common for a requirement to be in place that he or she be a full-time employee. This means they will need to work more than 30 hours a week.
It is also common for the terms to require the employee to have worked with the employer for a certain period of time. For example, you may not allow your employees to qualify for long-term disability if they haven’t been with the company for a year or more.
Should You Offer Long-Term Disability Insurance?
Long-term disability is one of those benefits that will be extremely attractive to potential employees. While no one really wants to prepare to be disabled, it is a necessity. Almost a quarter of individuals who are currently in their 20s will become disabled before they retire. Having long-term disability insurance can help them feel secure with their health.
Employers have many options when it comes to long-term disability insurance. Even if you are not able to pay for a portion of the insurance for your employees, they will still be able to see a benefit. Since they will be participating in a group plan, they will be able to save money with a lower premium.
In the end, choosing to offer a long-term disability plan to your employees can help you to retain your key employees and protect your business in the future. Having it in place is one of the best ways to offer a comprehensive employee benefits package to your employees.