Long term disability insurance is an income replacement in case of a debilitating illness or injury causing you to no longer be able to carry out your duties in your current occupation. A long term disability plan will pay up to 70% of your current income during the disability period. You may use the money as you see fit. The "long term" phrase has to deal with the length of time you will receive benefits. Usually a time period greater than 2 years or until the age of 67 years old depending on the plan you choose.
Time is right... So I'll add to the conversation by giving you some of the terms to understand the moving parts of disability. OK?
What are the common terms I need to know? There are three basic plan design terms that you’ll see on applications are EP (Elimination Period), BP (Benefit Period) and Benefit Amount.
Elimination Period (EP): Also known as the “waiting period,” this is the period of disability that must elapse before benefits commence. For example, if you have a policy with a 90-day EP and is disabled on January 1, he will be eligible for benefits 90 days later — roughly April 1. Note that your first check will arrive 30 days after the EP. So a 90 day EP is 4 months before the first check arrives.** Typical EPs are 60, 90 or 180 days. Choose an EP that is appropriate for your client. How long could you realistically sustain your lifestyle without income. Or think of it this way, "How long of a vacation could you take before having to get back to work to pay the bills?" Keep in mind policies with shorter EPs are more expensive than those with longer EPs.
Benefit Period (BP): The benefit period is the length of time that benefits will continue from the date they begin. Typical BPs are two years, five years, or to age 65/67.
Benefit Amount: The benefit amount is typically 60 percent of gross pay (or 83 percent of net pay, assuming a 28 percent tax bracket), up to a limit per month.
**Almost NO American can go 4 months without a paycheck. Disability Insurance is a cornerstone protection plan. Everyone should own DI. Yet we typically recommend that you pair your DI plan with Critical Illness Insurance (CI). This plan provides a lump sum when you are diagnosed with a specific disease: Cancer, Heart Attack, Stroke, Paralysis, Kidney Failure, & more (carrier dependent). So while you wait for the DI policy to kick in, CI can give you that fast cash injection to help stabilize your finances while you await the monthly benefits form your DI policy. Have questions???? P:lease reach out. - gravy
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What are the common terms I need to know? There are three basic plan design terms that you’ll see on applications are EP (Elimination Period), BP (Benefit Period) and Benefit Amount.
Elimination Period (EP): Also known as the “waiting period,” this is the period of disability that must elapse before benefits commence. For example, if you have a policy with a 90-day EP and is disabled on January 1, he will be eligible for benefits 90 days later — roughly April 1. Note that your first check will arrive 30 days after the EP. So a 90 day EP is 4 months before the first check arrives.** Typical EPs are 60, 90 or 180 days. Choose an EP that is appropriate for your client. How long could you realistically sustain your lifestyle without income. Or think of it this way, "How long of a vacation could you take before having to get back to work to pay the bills?" Keep in mind policies with shorter EPs are more expensive than those with longer EPs.
Benefit Period (BP): The benefit period is the length of time that benefits will continue from the date they begin. Typical BPs are two years, five years, or to age 65/67.
Benefit Amount: The benefit amount is typically 60 percent of gross pay (or 83 percent of net pay, assuming a 28 percent tax bracket), up to a limit per month.
**Almost NO American can go 4 months without a paycheck. Disability Insurance is a cornerstone protection plan. Everyone should own DI. Yet we typically recommend that you pair your DI plan with Critical Illness Insurance (CI). This plan provides a lump sum when you are diagnosed with a specific disease: Cancer, Heart Attack, Stroke, Paralysis, Kidney Failure, & more (carrier dependent). So while you wait for the DI policy to kick in, CI can give you that fast cash injection to help stabilize your finances while you await the monthly benefits form your DI policy. Have questions???? P:lease reach out. - gravy