The benefits and drawbacks of long-term disability insurance

Wisconsin employees may be interested in an article discussing some of the characteristics of long-term disability insurance. While this type of insurance is very beneficial to employees should they be unable to work, there may be difficulty in getting the insurance company to approve the claim.

There are generally two types of disability insurance. Short term insurance covers a person for a period of anywhere from three to six months, should that person be unable to work. Once that time is up, long-term disability insurance is necessary if the person is still unable to return to work. Long-term disability policies usually pay the person around 50 to 60 percent of the income they were earning prior to the disability, though there may be limits to the coverage.

At a time when government census data shows that around one-fifth of workers end up disabled for some amount of time, this type of insurance can be very useful. For those who are disabled long enough for long-term disability insurance to kick in, the average time away from work is two-and-a-half years. This type of insurance may be available through a group plan associated with the person’s employer. Supplemental coverage can also be purchased separately, in order to raise the percentage of income received up to 100 percent.

There is no guarantee that a claim will be approved by the insurance company, however. The insurance company will dispute the claim, in many instances. In cases where there is a long-term disability insurance claim denial on a group policy, government regulations require that all administrative remedies be exhausted before a lawsuit can be filed. This process can be lengthy. An attorney may be able to help with this process, from appealing the denial to filing a lawsuit if necessary.

Source: NASDAQ, “A guide to understanding long-term disability insurance“, June 24, 2014

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