Sometimes, employers will offer employees access to long-term disability insurance as part of a benefits package. Long-term disability insurance can provide critical financial support should a person be unable to work for an extended period of time due to injury or illness. Most of us heavily rely on our employment income to make ends meet for our family. Long-term disability can provide critical support at a time when income may lapse. It is important, however, to be aware of how much may be available to you through your employer-sponsored long-term disability insurance. It may not be enough to provide the level of financial support you need.
Is Long-Term Disability Insurance Through Your Employer Enough?
In the event that you are unable to work due to health issues, long-term disability insurance can step in to provide you with a continued income stream so that critical financial needs, such as mortgage payments and cost of living expenses, can continue to be met. If you have long-term disability insurance through your employer, you may have foregone the option of enrolling in your own long-term disability insurance policy independent of your employer-sponsored policy. You may, however, want to reconsider.
It is important to note that employer-sponsored disability coverage is not meant to cover 100 percent of the income you lose when you are unable to work due to a disabling condition. On average, these policies are intended to replace approximately 60 percent of your usual income level. Additionally, should your coverage be paid for with pre-tax dollars, the benefits you receive will be further reduced due to tax consequences.
There is also the “elimination period” to consider. An elimination period is the amount of time you have to wait before you can receive benefits from your long-term disability insurance. This period can range from 30 days up to 2 years. Employer-sponsored plans may have a long elimination period that you will likely be unable to negotiate for a reduction on. This means that you may have to wait an extended period of time before you can receive your much-needed benefits. If you have your own, personal long-term disability policy you may have a shorter elimination period so that you can receive financial support sooner rather than later.
So, before you forego getting a long-term disability insurance policy outside of your employer-sponsored policy, check the terms of your policy. Will it be sufficient to cover you should the need arise? You may want to consider purchasing a supplemental disability policy to cover any gaps. If you have made a job change, you may also want to look into long-term disability coverage. Oftentimes, you will not be able to take your employer-sponsored long-term disability coverage with you after a job change. Having your own long-term disability policy in place before you switch jobs could be a great idea. This is especially true if your future employer does not offer this benefit.
For all of your long-term disability questions and concerns, we have answers for you at Disability Advocates. Contact us today.