FAQ

Overview



  1. What is Long Term Disability (LTD) Insurance and why would I want it? LTD is an insurance policy that is designed to replace your earnings in the event you are unable to work due to an illness or an accident. Research on long term disability - which is defined as an accident or illness that results in an employee being out of work for three to six months - has produced statistics that highlight disability as a fundamental financial risk.

    Many individuals are unaware of the probability of disability compared to other insurable risks. While individuals regularly acquire insurance coverage to protect against the risk of premature death, a long term disability is much more likely to occur than premature death. The consequences of a long term disability can be financially disastrous for an individual and his or her family.


  2. What things should be considered when determining how much, if any, disability insurance I should have? Anyone considering disability insurance should take into account all sources of income from employment, savings and other investments. Next, you should estimate how much money you and your family would need to maintain your standard of living. You will also want to consider how much additional savings you would need to generate in order to cover education expenses and retirement income.


  3. What will be the tax implications for disability insurance? Disability Insurance follows a simple IRS rule: if you pay your premiums with after-tax dollars, any benefits received will be exempt from income taxes. If your company pays the premiums, any benefits received will be taxable as income.


  4. Is a disability insurance policy portable? It depends. Group LTD is not portable and will not continue if you leave your organization. However, if you have an individual policy, your coverage does not end in the event that you leave your organization. As long as you continue to pay your premiums directly to the insurance company, your coverage will continue, uninterrupted.


  5. How does an individual policy compare to group insurance and why should I buy it through my workplace? Individual disability insurance policies allow portability and provide enhanced features such as a full own occupation definition of disability, no offsets for Social Security income, and fixed pricing. When an executive purchases individual disability insurance through his or her workplace, he or she is generally offered a deep discount that can range from 25%-40%. There is also no medical or financial underwriting required to receive the individual disability policy.