Long Term Disability Can Provide Security To Workers
People who have become disabled due to either illness or injury and are no longer able to earn an income that will cover their living expenses have a number of options available to them. On this site, we have a lot of information regarding federal disability programs such as Social Security Disability Insurance, Supplmental Security Income and VA disability benefits. We've also written about state programs such as workmen's compensation and the temporary disability benefits offered in a few states, Puerto Rico, and to railroad employees. We've also explained how short term disability insurance works, and also talked a little about the programs available to disabled workers in countries other than the USA. In this article, we're going to try and cover the basics of long term disability insurance.
Long term disability is pretty similar to short term disability insurance except the period of coverage will be longer. The idea behind this type of policy is that if you become disabled, (as per the policy's definition of the term) it will pay you a monthly benefit so that you're able to take care of all those monthly bills, such as mortgage payments, groceries, auto expenses and more.
Each policy will differ in the amount of monthly benefits they will pay and the amount of time they will pay them for. Of course, when selecting a policy, you want to make sure the monthly payout will cover all your monthly expenses should you become unable to work. As far as the length of the benefit period, long term policies will pay you for a period of time ranging from two years on the short end all the way up to until you the age of 65. Naturally, the longer term policies (assuming equal weekly benefits) will be more expensive.
We alluded to the policy's definition of disabled before. This is a point worth major consideration when choosing your policy. There are three definitions of 'disabled' used in these long term disability policies. The first is called Own 0ccupation. If you have this type of policy, you will be paid if you are unable to perform your customary job, even if you go out and get a different type of employment. As you might expect, this is the most expensive type of policy. More common is what's called Modified Own Occupation, which will also pay benefits in the event you can't perform your regular job, with the stipulation that you perform no work for pay whatsoever. If you get bored and go out and get a different type of job that isn't affected by your disability, your benefits will be reduced or even cancelled. Finally, the least expensive type of coverage is called Any Occupation or sometimes Gainful Occupation. This policy only pays out if the holder can't do any type of work for which they're qualified.