Disability insurance was developed to protect the employee's income in the event of a disabling sickness or injury.
Group Short Term Disability Insurance (STD)
The STD Plan continues an employee’s salary during periods of illness or other disabilities for a limited time usually extending for approximately six months. Maternity leave is typically covered under a STD program. The plan protects a percentage of the employee’s weekly income and is normally designed with four guidelines:
- Percentage of coverage
- Date coverage begins due to accident
- Date coverage begins due to sickness
- Duration of coverage
Group Long Term Disability Insurance (LTD)
The LTD plan also provides income to employees who are disabled due to injury or sickness.
The LTD plan is designed to supplement Social Security and is usually payable for the duration
of the disability, to age 65, or until death. LTD protects a percentage of the employee’s monthly salary. Many times, the LTD plan is coordinated with the STD plan so that there is continuous coverage. All LTD contracts differ. It is important to make sure that the LTD contract addresses the following:
Maximum Monthly Benefit |
Integration with Social Security |
Elimination Period |
Survivor Benefit |
Benefit Period |
Cost of Living |
Definition of Disability |
Conversion |
Own Occupation Protection |
Rehabilitation |
Residual/Partial |
Rate Guarantee |
Zero Day Residual |
Pregnancy Coverage |
Trial Work Days |
Pre-existing Conditions |
Return to Work Adjustment |
Mental & Substance Abuse Disorders |
Residual Indexing |
Definition of Prior Earnings |
