When it comes to protecting your income in the event of a long-term illness or injury, a long-term disability (LTD) policy can provide peace of mind. However, it is important to understand the specifics of your policy in order to maximize its benefits and ensure that you are able to receive the coverage you need.

Definition of Disability

The first step in understanding your LTD policy is to understand the definition of disability that is used in the policy. Most policies define disability as the inability to perform the material duties of your own occupation. However, some policies use a more restrictive definition, such as the inability to perform any occupation for which you are reasonably suited based on your education, training, or experience.

Benefit Period

Another important aspect of your LTD policy is the benefit period, which is the length of time for which benefits will be paid. The most common benefit period is to age 65, but some policies may have a shorter benefit period, such as two or five years.

Elimination Period

The elimination period is the amount of time that must pass before benefits begin to accrue. This is similar to a deductible on your health insurance. Common elimination periods include 90 or 180 days.

Benefit Amount

The benefit amount is the amount of money that will be paid to you each month in the event of a covered disability. This amount is typically a percentage of your pre-disability income, such as 60%. Some policies may also have a maximum benefit amount, such as $10,000 per month.

Proof of Loss

In order to receive benefits under your LTD policy, you will typically be required to provide proof of loss, which can include things like medical reports, diagnostic test results, and statements from your doctor. It is important to keep detailed records and provide any requested documentation in a timely manner.

Pre-Existing Conditions

Many LTD policies exclude coverage for pre-existing conditions. This means that if you have a condition that existed before the policy was in effect, it may not be covered. Be sure to review your policy carefully to understand any exclusions.

Returning to Work

If you are able to return to work on a part-time or limited basis, you may still be eligible for benefits under your LTD policy. However, it is important to understand how your benefits will be affected and to provide documentation of your work status to the insurance company.

It is important to keep in mind that long-term disability policies can vary greatly in terms of coverage and exclusions. This means that it is essential to thoroughly review your policy and speak with your insurance company to ensure that you understand the specifics of your coverage. By understanding the key components of your LTD policy, you can be better prepared to navigate the claims process and receive the benefits you need to support yourself and your family in the event of a long-term disability.