Long-term disability (LTD) insurance is a policy that protects employees from loss of income in the event that they are unable to work due to an injury or illness. With a payout from an LTD policy, workers can continue to pay bills and meet other financial obligations.
Benefits are generally about 50 to 80 percent of a person’s gross income, according to Nolo. The employee must meet the definition of disabled, outlined in the particular policy which may vary between policies.
Additionally, the employee can only receive benefits after an elimination period. The default elimination period for long-term disability insurance policies is 90 days. The law does not require employers to offer long-term disability insurance. However, many employees consider LTD to be an appealing component of an employee benefits package. Business owners can attract top talent and maintain existing workers by providing access to long-term disability policies.
Common Reasons for Disability Claims
Under the Americans with Disability Act (ADA), a disability is defined as a physical or mental impairment that has substantially limited one or more major life activities. A major life activity is any function that is important to the daily life of most people, such as breathing, talking, walking, seeing, hearing, sleeping, working, performing manual tasks, or caring for one’s self.
In some cases, a major life activity may involve a major bodily function, such as digestive, bladder, bowel, circulatory, respiratory, immune system, endocrine, or reproductive system function. Some of the most common reasons that employees make disability claims include:
Neck & Back Pain
Neck and back pain has the power to significantly diminish a person’s mobility and potentially cause severe pain. These types of injuries can occur for a wide range of reasons, such as a disease, accident, degenerative disorder, or as a result of work or recreational activity. A neck injury can occur in a variety of ways, such as whiplash from an accident, strained muscles, or compression of nerves. Neck injuries can be very serious and cause disabling symptoms like pain, numbness, severe headaches, limited range of motion, and difficulty swallowing.
Back injuries often originate due to damage to the spine, such as in the case of spinal stenosis, arachnoiditis, and degenerative disc disease. A back injury can lead to painful symptoms like severe pain, muscle spasms, numbness and tingling, difficulty standing for long periods of time, pain that radiates into the legs, and difficulty in movement.
Muscle disorders can cause pain, weakness, and in severe cases, paralysis. There are many different causes of muscle disorders, such as injury, overuse, certain types of cancer, inflammation, infections, certain medications, diseases of the nerves that affect muscles, and certain genetic disorders, such as muscular dystrophy. Some types of muscle disorders can make it highly challenging to perform common work tasks. Often, disorders such as arthritis, fibromyalgia, and reflex sympathetic dystrophy (RSD) can cause severe pain that puts limitations on a person’s ability to function.
Foot & Hand Disorders
Many employees use their hands to perform work-related tasks and may stand on their feet for long periods of time. Certain foot and hand disorders can make it nearly impossible to work efficiently and without experiencing severe pain. Some of the most common foot conditions that can make it difficult to stand and walk include heel spurs, plantar fasciitis, cartilage damage, tendon ligament damage, and crush injuries. Hand and wrist disorders like carpal tunnel syndrome, tendon damage, and osteoarthritis can also be severe enough to cause a disability.
Disability benefits may be rewarded to certain employees who have been diagnosed with cancer. According to the American Cancer Society, there are more than 200 types of cancer and approximately 1.7 million new cases being diagnosed each year. While some are treatable, others are highly aggressive and spread quickly. While cancer itself can be disabling, treatments for cancer such as radiation and chemotherapy can also have serious side effects that make it impossible to continue working. Some of the most common types of cancers eligible for disability include aggressive brain cancers, advanced stages of kidney or bladder cancer, breast cancer, late-stage endometrial cancer, and colon cancer that is considered recurrent, metastatic, unresectable or inoperable.
Factors Which Influence the Cost of Long-Term Disability Insurance
Several factors can affect the cost of a long-term disability insurance policy, such as:
- Occupation – Work environments that are considered hazardous will often result in a higher premium, such as a job that requires employees to work with heavy equipment.
- Health – The health history of an employee may play a role in the cost of a premium, such as a history of back injuries, asthma or heart conditions.
- Benefit Period – How long a company is willing to pay for a disability will also influence the cost.
- Elimination Period – Some policies may feature shorter elimination periods which can drive up the cost of the premium.
- Provisions – Certain provisions, such as a policy that pays both total and partial disability, can affect the cost of the policy.
Long-Term Disability Exemptions
Many long-term disability policies have exemptions and limitations that may prevent an employee from collecting benefits. If a person has a preexisting condition before applying for disability insurance, the insurance company may apply a preexisting condition clause to the policy. Other common limitations found in long-term disability policies include those relating to mental and nervous conditions.
These conditions may include stress, depression, anxiety, or dementia. Alcohol and substance abuse may also be limitations on a policy when alcoholism or substance abuse causes the disability. Other exemptions may include suicide attempts, war or acts of war, injuries on the job, normal pregnancy, intentional acts that cause disability, or injuries caused by an aircraft with the exception of passengers on scheduled airline flights.
Speak to an Experienced Business Insurance Agency
Long-term disability insurance can help ensure that employees have the benefits they need to maintain their health and wellbeing following an event that results in a disability. For more information about long-term disability insurance or for assistance choosing the right policy for a business, contact the business insurance experts at Business Benefits Group.