Long-term disability covers a portion of your lost income due to a disability. It is meant to provide some financial security in the case of an accident, but do not protect you from increased medical costs associated with your age or disability.
These policies vary in benefits amount, qualification types, elimination period, and cost depending on where and when you get them, which makes it important to make sure you get the right policy for your needs. LTD policies are often provided through work as a group, or ERISA, policy, but may not provide the best coverage, even if they are no cost to you.
Long-term disability insurance can be extremely beneficial for those working in specialized or high-paying fields, as it allows them to maintain a level of income comparable to their pre-disability earnings in case an accident takes away their ability to work.
To receive long-term disability benefits, your disability must meet your policy’s definition of disability. The main definitions of disability are:
- Own Occupation: You must be unable to perform the job listed as your occupation on your disability policy.
- Any Occupation: You must be unable to work any job to which you are “reasonably suited,” regardless of job difficulty, industry, or expertise.
Any occupation policies tend to be less expensive but are much stricter when it comes to receiving benefits. Your benefits may be denied if you’re able to work in another job or industry, even one that is lower paying or less fulfilling for you. Own occupation policies are more expensive, but are much easier to qualify for, and sometimes allow you to continue working in a different field without losing your benefits.
Unfortunately, many disability polices will begin as an own occupation definition and will switch to an any occupation definition after 24 months, causing policyholders to potentially lose their benefits. It is important to carefully look over your disability policy options, especially if you are offered a plan through your employer. These policies may offer savings now, but will leave you without the coverage you need and make filing an appeal more difficult down the line.
