What did I just sign up for? Understanding your group long-term disability plan

Given that we’re only a few weeks into 2017, chances are good that you’re still getting used to some of the adjustments you made to your employee benefits during annual enrollment. For example, it could be that your paycheck is now smaller owing to larger retirement contributions or that you’re back to having to pay deductibles for medical insurance.

It could also be that there is one adjustment you made for 2017 that you have yet to notice to any real degree: the decision to opt into group long-term disability coverage through your employer.

First and foremost, you are to be commended for your good judgment and second, chances are good you may not notice this disability coverage until you actually need it and, at that point, you’ll be very glad you have it.

Nevertheless, it’s understandable how a person could have questions about what it is that they actually signed up for during annual enrollment. As such, today’s post will provide some basic background information.

In the event you are injured or diagnosed with some illness, your employer most likely has some mechanisms in place to cover your absence from a wage perspective, such as sick leave, vacation time, workers’ compensation and short-term disability. But what happens when your condition necessitates more than just a few, days, weeks, or months away from work?

These are the sorts of situations where long-term disability is truly indispensable, providing much-needed coverage once short-term disability ends.

As for the amount of salary replaced by long-term disability coverage, a typical policy will provide benefits totaling 60 percent of your total wages up to a designated maximum benefit.

While this isn’t full wage protection, long-term disability payments can nevertheless provide you with the comfort that comes from knowing that you’ll have the money you need to cover basic living expenses, including mortgage payments/rent, groceries, car payments, clothes and utilities.

As for how long long-term disability payments last, it can vary depending on the terms of the policy. However, many last until you are able to return to work or reach your Social Security retirement age.

We’ll continue this discussion in our next post …

Source: Consumer Federation of America, “Long-term disability income insurance: Financial protection for you and your family,” January 2017