This type of benefit plan tends to be overlooked by small and mid-sized employers but it is a critical component of providing an overall benefit program.

This program pays a percentage of an employee's earned income after a specified elimination period (i.e. a 60, 90 or even 180 day waiting period), in the event an employee becomes “disabled” from either an accident or illness.  This elimination period is similar to a deductible found in other types of insurance.  There is a maximum monthly benefit, which typically range from $ 5,000 to $ 7,500 maximum.

Benefits are generally based on a percentage of the employee's income.These plans also offset with other plans such as SDI, Workers Compensation and Social Security being the most common. In addition there is a maximum benefit period, which can range from as short as 2 or 3 years and up to age 65. Plans also include a “definition of disability”, and a preexisting condition clause, plus a significant number of terms and conditions definitions associated with these plans.

If a claim is submitted and approved, the carrier will issue a check each 30 days, after the waiting period has been satisfied.  Long Term Disability or LTD  is not designed to replace the majoroty of anyone’s income. Benefit limits are established such that employees should receive a significant amount of their regular paycheck.