Long Term Disability Insurance
Protecting Your Income
Many experts say the chances of long term disability exceed that of death at any given time.
Long term disability insurance will your wages as long as you are unable to work. It is expensive insurance, but vital for wage earners with a spouse and children to support.
Most employers provide short term disability insurance, usually a year or less. You also might be able to get short term disability coverage from your state.
Long term coverage kicks in when all other benefits run out. It is supposed to pay as long as you can't work.
Problems arise over the definition of ability to work. If you were a bricklayer, will your insurance company stop your payments if they think you can work as a greeter in Wal-Mart?
If you were a lawyer, will they cut off coverage if they say you can work as a file clerk?
The better, and more expensive policies, will provide benefits for as long as you are not able to perform the same or sufficiently identical work as you did before your disability arose.
If you pay for your own disability policy, benefits you receive will be tax free. If your employer pays the premiums, the benefits will be taxable.
This is a policy that causes frequent conflicts between insured and insured. You do not have to accept the insurance company's decisions, especially about returning to work.
The policy should spell out your rights of appeal. I would hire a litigation attorney if the carrier were trying to force me to return to work and I thought myself unable.
Another similar policy is long term care insurance. This pays for nursing home expenses if you reach a certain age or suffer disabling medical conditions. Premiums are not expensive if you start young. Group coverage is usually available.
In trying to determine if you need such a policy, look at the medical history of your parents and grandparents. Did they suffer from conditions that required nursing home care? A lot of the medical conditions you will suffer from over your lifetime will be determined by genetics.
Other than that, it's anybody's guess whether you will ever get any benefit from this type of insurance.
