What is long term disability insurance and do I need it?


Long Term disability insurance pays a portion of your gross income in the event that you get disabled. The payments may be made for an extended period of time, as opposed to short-term disability insurance, which pays up to a maximum of six months. (Please note that payment periods may vary and will depend on the kind of policy purchased.) The payments will start after a specified waiting period.

Here are some questions to ask to see whether you do need your very own long term disability insurance:

  • Do I have enough savings to cover me and my family's needs in the event that I become disabled for an extended period of time? Consider the fact that your savings may be able to tide you over f you get a short-term disability but may not be able to support you if you have a long term disability.
  • Do you have health risks that may result in impairment? Study your family tree to see whether you are especially vulnerable to some disease listed as covered by long term disability insurance.
  • Will Social Security disability benefits be enough? Now, this would need a balancing act. The private insurance policy often deducts what you get from Social Security disability from what you stand to receive from them. So you need to ask yourself whether your Social Security disability coverage will be sufficient to cover your needs during your disability. Another point to consider with your Social Security disability is that it may deny your application due to the fact that you failed to meet the eligibility requirements as set forth by the Social Security Administration.
  • What will happen if I have a long term disability? Some consequences of not having long term disability insurance may be that the affected family may face the foreclosure of their home due to delinquency on mortgage payments, the inability to get the needed treatment for the disability and the inability to provide for the family's basic needs.
  • Do I already have the coverage? Most employers offer this benefit, or if they don't, they may offer you this coverage at a reduced price - you pay for the premiums, but these will be cheaper since the plan is offered as a group plan. You should check the policy of your employer to see if you are already covered.
  • Do the benefits justify the premiums? Find out whether keeping the supposed premiums in a savings account is more cost-effective than buying insurance. This may vary from person to person.
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