Long-Term Disability Insurance (LTD)

The LTD Benefit

When You Will Receive Your First LTD Check

Most LTD plans have a service wait, which is a set period of time before coverage actually begins. If you have a pre-existing condition exclusionary period, it starts after the service wait ends. When the service wait and exclusionary period are over, you are eligible for a benefit.

The date when this happens is called the coverage effective date.

Once you apply for a benefit, there is usually a waiting period (also called an “elimination period”) before you can begin to receive benefits. This waiting period generally lasts between 30 and 180 days. Shorter or longer waiting periods are available under some LTD policies. Usually, the longer the waiting period, the lower the premium will be.

The Benefit

Each policy has a different way of determining how much money you will receive. Some send you a set dollar amount. Other policies might take your pre-tax wages and give you a certain percentage of those wages. The pre-tax wages that insurance companies use to determine your benefit may include bonuses and other salary from the employer.

Most policies will subtract any benefit you receive from other programs like Workers’ Compensation, Social Security Disability Insurance, State Disability Insurance, or other programs that are designed to replace income.

Benefit Period

Benefit period defines how long LTD benefits will be paid. The most frequently offered periods are two years, five years or until you retire.

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