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  Home  >  Employee Group Benefits  >  Group Life Disability
   
 

Disability Insurance is another common insurance benefit in competitive Employee Group Benefit Programs.

Group Short Term Disability (GSTD)

Group Short Term Disability (GSTD) is an employer provided benefit that is designed to assist an employee in replacing a % of lost income, due to either sickness or accident. These plans establish an elimination period before the employee becomes benefit eligible and will pay benefits as long as the employee remains disabled up to a maximum number of weeks as defined in the policy.

A typical plan might reimburse an employee 60% of his or her salary after that employee has been disabled due to injury or accident for 7 days, or after the employee has been disabled due to sickness for 7 days. The goal being that the STD plan is designed to replace a portion of an employees lost income that is sufficient to pay for the basic needs of a family. Benefits might be limited to $750 per week, and are payable for a maximum of 26 weeks. Disability Benefits can provide a significant financial cushion to employees when they are unable to work and earn an income.

The following are some provisions that make up the bulk of a Short Term Disability contract.

  • Maximum Covered Salary: This is determined by the employer and the total aggregate salary of the employees in the company.
  • Elimination Period: This is the amount of time that must pass before a disabled employee becomes eligible for benefits. This can be anywhere from the 1st day of disability to the 30th day.
  • Duration of Benefits: This represents how long benefits will be payable, i.e. 4 to 26 weeks.
  • Residual Disability: If an employee is disabled and then returns to work, and experiences an earnings loss of 20% or greater, he/she will still receive a benefit to offset this earnings loss.



Long Term Disability (LTD)

Long Term Disability plans are similar in nature to STD plans, but are designed to replace a percentage of income for employees who will remain disabled beyond the maximum period of a Short Term Plan. These plans are characterized by a Benefit Waiting Period (i.e. 90 days, 180 days), and benefits are usually payable to normal retirement age as long as the employee remains totally disabled.

A typical LTD plan might reimburse an employee 60% of his or her salary after the employee has been disabled for 90 days, to a maximum benefit of $5,000 per month. Benefits are payable as long as the employee remains disabled as defined by the policy or reaches the age of 65 (or other age defined by the policy).

LTD Plans provide important security to an individual and his/her family in the event that an employee cannot earn a living due to a disabling condition. The primary goal of a LTD plan is to replace a portion of an employee's lost income that is close to the employee's after-tax take home pay.

The following are some provisions that make up the bulk of a Long term Disability contract.

  • Maximum Covered Salary: This is determined by the employer and the total volume of salary of the employees in the company.
  • Elimination Period:  This is the amount of time that must pass before a disabled employee becomes eligible for benefits. This can be anywhere from 30 to 180 days.
  • Duration of Benefits: This represents how long benefits will be payable, i.e. to age 65, or standard retirement age.
  • Own Occupation Protection: This feature ensures that if an employee is disabled, and cannot perform the material duties of his or her own occupation that they were trained for--they will still be considered totally disabled. This can be as short as 2 years or as long as standard retirement age (ADEA).
  • Conversion Privilege:  The policy can be converted to an individual policy if an employee changes jobs.  
  • Residual Disability:  If an employee is disabled and then returns to work, and experiences an earnings loss of 20% or greater, the employee will still receive a benefit to offset this earnings loss.


*Note that this is a partial list of the contractual features available in LTD contracts.

For more information, please call us at 1.800.508.1144.

   


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