Many people aren’t aware of their options when faced with a long term injury or illness. Insurance companies have rules and regulations which make it difficult to navigate through the claims process, and time limitations can block legitimate claims. It is important to understand your options.
In comparison to short term disability insurance, long term disability insurance is more permanent. It will reduce the financial hardship experienced by you and your family in the event that you are unable to return to work due to a medical condition. Most policies provide benefits for the first two years, but to qualify beyond that, you must be unable to perform the tasks required for any occupation that you are reasonably qualified for.
It is also important to note that you can obtain disability benefits even if your injury or illness occurred outside of the workplace. In this way, disability benefits differ from workplace-insurance benefits.
Group Disability Insurance or Individual Disability Insurance?
1. Group Disability Insurance Policies
A group disability insurance policy is purchased by your employer. It provides disability coverage to employees who are injured and therefore unable to work. Premiums may be paid in full or in part by the employee, employer, or a combination of both.
There are tax implications, depending on how the premiums are paid; for example, if the employee pays the premiums for group-disability insurance, the disability payments are non-taxable. The law becomes more complicated if the payment for the policy is shared between employers and employees.
A typical policy covers 66.66% of the pre-disability income, with monthly maximums that put a limit on the amount.
2. Individual Disability Insurance Policies
An individual disability insurance policy is purchased privately by an individual through an insurance broker or insurance company. Even if an individual has group coverage from their employer, they can choose to purchase additional insurance privately. Individual disability benefits generally offer a greater variety of features than a group plan.
Private disability insurance payments are non-taxable, as they exist outside of the employer-employee relationship.
With this kind of policy, benefits are pre-determined so that the individual already understands what their monthly disability benefit would be in the event of an injury or illness.
If you are unable to work due to a long term disability, it is essential that you seek a lawyer who has the experience and knowledge to help you through the process and handle your claim.
>> In the coming months, we will be creating additional videos to answer commonly asked questions and to help you learn more about long term disability insurance. In the meantime, if you have any questions or would like to schedule a free consultation, please contact us.