Long-Term Disability Insurance (LTD)


John's Story

John is unemployed. In January 2022, he goes to the doctor because his back is hurting him. The doctor prescribes some painkillers and sends him home to rest. In February, John gets a job and signs up for Long-Term Disability Insurance (LTD).

A month later, he gets a letter from the insurance company about his LTD. It explains that he will have a 2 month service period. This means that he will have LTD coverage starting April 1, 2022, two months after the date he was hired. So, if John is injured between February and April, he will NOT be able to apply for LTD benefits. The LTD policy uses the “Own Occ” definition of “disability”, which means that John has to be unable to work in his own occupation to be defined as disabled.

The letter goes on to explain that his back injury is a pre-existing condition, and that he will have a 1 year exclusionary period. The exclusionary period begins on the same day of his coverage, April 1, 2022. If he becomes disabled due to his back injury between April 1, 2022 and April 1, 2023, he will NOT be able to collect LTD benefits.

In May of 2023, John hurts his back and can no longer go to work. Since the waiting period and exclusionary period are over, John can begin to receive LTD benefits. He knows that it may take awhile to get his first LTD check, so he immediately contacts his Human Resources manager. The manager tells him that there’s a 60 day elimination period from the date of disability before his benefits begin. John will start receiving his benefits on July 1, 2023.

John was making $2,000 a month before he hurt his back again. His policy pays 50% of pre-disability wages for up to five years. So, John will receive $1000 a month from LTD until he is no longer considered disabled or 5 years pass, whichever is shorter.

John's Timeline
January 1, 2022 John goes to the doctor for his back
February 1, 2022 John is hired and signs up for LTD with a 2 month waiting period and 1 year pre-existing condition exclusionary period for his back injury
Feb. 1 –
March 31,
John is not yet covered by LTD
April 1, 2022
April 1,
John is covered by LTD, but not for a back injury
April 1, 2023 onwards John has full LTD coverage
May 1, 2023 John injures his back, and can no longer go to work.
May 2, 2023 John calls his Human Resources manager and applies for LTD
May 1 –
July 1,
The 60 day elimination period where John is not working but is not yet receiving a benefit
July 1, 2023 John begins to receive his monthly LTD check of $1000

Different plans may have different definitions of disability, waiting periods, exclusionary periods, and benfit calculations.

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