Long Term Disability Plans are what they call in the insurance industry “living policies” or “living benefits“. You need to be alive in order to recover on going LTD Benefits.
In their most basic form, these LTD policies are there to protect an insured person in the event of serious disability which prevents that person from working at their own occupation, or at any gainful occupation.
If an insured person meets the test for disability, and they have filed all of the proper paper work, then in a perfect world; that person will receive long term disability benefits for the period for which they are disabled.
The amount of the monthly LTD benefit depends on your policy along with your pre-disability income. Some polices have a set monthly benefit amount like $1,000/month; regardless of income. Other policies base the monthly benefit amount on a percentage of your monthly pre-disability gross or net income, depending on the wording of your policy (ie 66.67% of your gross income averaged in the year before your disability).
All of these calculations sound simple enough. But have you ever read the fine print of these policies? Have you ever paid attention to how long some LTD policies can be?
The devil’s in the details, and the wording of these LTD policies can rise up and have a negative impact on your long term disability case.