Providing Long-Term Income Protection for Life's Unexpected Challenges
Group long-term disability (LTD) insurance is a valuable employee benefit that provides financial protection when a serious illness or injury prevents someone from working for an extended period. While short-term disability plans offer temporary relief, long-term disability ensures continued support when recovery takes longer than expected—or isn’t possible.
What Is Group Long-Term Disability Insurance?
Group LTD is typically offered by employers as part of a comprehensive benefits package. It replaces a portion of an employee’s income—usually 50% to 70%—if they are unable to work due to a covered disability that extends beyond the short-term disability period.
When Does It Begin?
Long-term disability benefits usually begin after a defined elimination period, often 90 to 180 days after the date the disability begins. During that time, the employee may rely on short-term disability or other paid leave.
What Conditions Are Covered?
- Cancer or other serious illnesses
- Heart disease or stroke
- Musculoskeletal disorders
- Mental health conditions
- Severe injuries from accidents
Key Features of Group LTD Plans
- Cost-Effective: Group plans are generally more affordable than individual policies.
- Income Replacement: Benefits help maintain financial stability during a long recovery.
- Flexible Structure: Employers can choose to fund the plan, share costs, or offer it as a voluntary benefit.
- Rehabilitation Support: Many plans include resources to help employees return to work when possible.
Who Pays the Premium?
Plans can be fully employer-paid, employee-paid, or contributory (shared cost). The taxability of benefits depends on who pays the premium—if the employer pays, benefits are generally taxable; if the employee pays with after-tax dollars, benefits are typically tax-free.
Why Offer Group LTD?
Long-term disability can be financially devastating for employees and their families. Offering this coverage helps protect their income and provides peace of mind. For employers, it’s a way to show commitment to employee well-being, support workplace productivity, and reduce turnover.
Considerations When Choosing a Plan
- Elimination period duration
- Maximum benefit period (e.g., 2 years, 5 years, to age 65)
- Definition of disability (own occupation vs. any occupation)
- Partial disability and return-to-work incentives