Why Everyone Needs Long-Term Disability Insurance

What would your employees do if they became injured or ill and couldn’t work for an extended period? How does this affect morale?

By the time people reach age 35, they have a one in three chance of being disabled for more than 90 days during the rest of their working life, according to America’s Health Insurance Plans, a trade organization. A MetLife survey indicated that an increasing number of employees are more concerned with having financial security in the event of a disability than they are with premature death.

Group long-term disability income (LTD) insurance provides your employees funds to help them meet daily expenses when they cannot work. This security can enhance recruiting, retention and productivity.

Employers can cover the entire cost of LTD, cost-share with the employee or offer coverage as an employee-paid, voluntary benefit. You can also offer group or individual coverage.

Studies show that almost half of mid-size to large employers provide coverage that pays benefits for at least five years. Typical group policies replace 50 to 60 percent of income, which balances disabled employees’ need to meet expenses with the employer’s need to provide incentives to return to the job. Many employers fund a basic plan to protect employees, who can then add supplemental coverage to meet their individual financial needs.

Most individual disability policies are non-cancelable, so the insurance company cannot cancel the policy (except for nonpayment of premiums, of course). This gives employees the right to renew the policy every year without an increase in premium or a reduction in benefits, regardless of their health. Group disability income insurance policies differ: they are usually “guaranteed renewable.” If a policy is guaranteed renewable, the insurance company cannot change your benefits if you pay your premiums on time, but it can increase your premium on a policy anniversary as long as it makes a similar premium increase for your entire class of policyholders. You typically pay more for a non-cancelable policy because you are paying for the protection against a premium increase.

Young couple looking at their benefitsWhat to look for

As with all benefit programs, employers have many options when selecting a group LTD plan:

  • Ease of use. Employees and employers should have easy, timely access to information. Many employers like having online access to plan information and usage data, including the number of people on leave, average length of leave, and at which locations. For employees, plans often work best when they offer multiple ways to get information, whether mail, phone or online.
  • Rehabilitation. Evaluate the insurer’s capabilities in rehabilitation and case management. How successful has the carrier been in helping employees return to productive work?
  • Guarantee issue. Employees can get coverage up to a specific limit regardless of health conditions. This means the insurer might place a limitation on pre-existing conditions in the first 12 months, for example. But the insurer issues coverage rather than denying it, so the insured can get immediate coverage for disabilities resulting from accidents or non-pre-existing conditions.

Group long-term disability coverage provides a valuable addition to a well-rounded benefits program. If you’d like to learn more, please contact USI and we’ll help find you a policy that’s right for you.


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