If you have been injured or become seriously ill, you will be glad you paid the premium for long term disability insurance. It will help you face the financial struggles of not be able to work for up to five years or until you reach the age of sixty-five.
Why you Need Long Term Disability Insurance
Unlike the short term benefits, long term disability payments will commence once the short term payments are exhausted. Depending on the policy, this may be anywhere from three to six months. If you are still unable to return to your job, the long term insurance will begin sending you monthly compensation checks.
The goal of disability insurance long term is to give the opportunity to receive the proper medical care needed to resume employment. Unless you are totally disabled and can no longer work, now or in the future, the insurance payments should last long enough for you to resume a normal personal and professional life.
The payments will last anywhere from two to five years, depending on the disability policy. If you turn sixty-five before regaining employment status, the disability payments will cease, in favor of Social Security benefits. If you know you will not be able to return to work, before the long term disability insurance payments are exhausted, it still gives you some time to come up with different financial solutions. For example, you might be able to apply for Social Security Disability Income or some other public benefit.
Disability Insurance Payments
Unfortunately, disability insurance payments are not comparable to the goose that laid the golden egg. In fact, it will still require a significant drop in your standard of living. Even if you qualify for the full benefit, it is generally only fifty to sixty percent of your normal monthly income.
But, if you have already qualified for short term disability payments, the long term benefits should commence immediately after the other benefit has maxed out. So, you should not have to wait weeks for approval or adhere to a specific waiting period, before starting to collect your benefits.
Once you start receiving benefits, you are not normally required to continue paying the monthly premiums for insurance. So, that is one less bill you will have to worry about. If the insurance is paid by your employer, the benefits are generally tax free. If you have been paying your own premiums, you may have to pay taxes on the benefits you receive. In some cases, the insurance will also increase the benefits yearly, if the cost of living goes up. When you purchase a policy, or receive it as a benefit of your job, you might want to check and see how this particular policy pays.
In any case, long term disability insurance is a must for employees that are not independently wealthy, have financial obligations, and do not have at least six months of wages sitting in their savings accounts. Hopefully, it will never have to be used; but, in the event of serious illness or injury, disability payments can provide a measure of financial security.