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What is Long Term Disability?

Everyone, regardless of age or gender, can fall victim to an accident, injury or illness. In fact, according to the Social Security Administration, there is a 30 percent chance of becoming disabled before reaching the age of retirement. Depending on the severity of the disabling incident, it may cause enough harm that the victim is no longer able to perform the same functions that he did prior to becoming disabled. As a result, he may no longer be able to continue working. When this happens, it is known as long term disability.

Long term disability is a medical disability that is either permanent or long lasting. Some employers offer group long term disability insurance for their employees as a part of their benefits package. In other cases, a person may want to purchase an individual long term disability insurance policy. In order to take advantage of the long term disability benefits the employee must first exhaust any other benefits that are available to him, such as his short term disability benefits, if applicable.

Individual disability plans can be purchased by self-employed individuals or people who want to supplement the plan offered by their employer. These plans are generally more expensive, with premiums that are based on the applicant's current type of occupation, age and overall health. Depending on the type of long term disability insurance plan, it may last for as few as five years or until the age of retirement. Group plans, however, tend to pay benefits for a shorter time if the insured is unable to work. The ensured must then be required to prove that he is unable to work for continued benefits.

A person can expect to be paid roughly between 50 to 60 percent of their salary when they are receiving long term disability benefits. In addition, there is a waiting period before the first payment goes into effect. The amount of time can vary, but it is typically 90 days. In some individual plans a person may be able to choose the length of their waiting period, however selecting a shorter waiting period may result in higher premiums.

The federal government also offers long term disability in the form of Social Security benefits, also known as Social Security Disability Insurance, or SSDI. This type of benefit is available for people who have a medical condition that is expected to last, at minimum, one year or that may end in death. In order to be eligible for Social Security disability benefits a disabled person must meet the program's requirements, in terms of how long he's worked. They must pass what is called a "duration of work" test which shows how many years he will have needed to have worked at the time of becoming disabled.

Another test that must be passed is the "recent work test" This test is meant to determine the number of calendar quarters that a person has worked before becoming disabled. The amount of quarters worked in order to be eligible depends on the age of the person when they became disabled. For example, if a person is 24 when he becomes disabled, the Social Security Administration (SSA) will look at the previous three years to determine if he has worked for a minimum of 1.5 years before the quarter that he became disabled. This changes by age, however. Between the quarter after a person turns 24 and the quarter that he turns 31 he must have worked at least half of the number of years since turning 21. For example, if a person becomes disabled at the age of 29, 8 years will have passed since he turned 21. He must have worked at least four of those years to be eligible for Social Security disability benefits.

Long term disability insurance is a way to cover one's expenses in the event of serious injury or illness. While some employers offer the option for long term insurance, it is not mandatory. For people with permanent disabilities, they may be eligible for the federal Social Security Disability Program. Although it may never be necessary to take advantage of any type of disability insurance, it is still one of the most important insurance coverages that anyone can have. For this reason it is important to understand not only what it is, but what options are available.

 

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