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Facts About Long Term Group Disability Insurance
Full-time employees are provided group disability insurance by their employer that generally covers 60% of the gross income earned by the employee before the occurrence of disability, or to a specific maximum amount like $10,000 per month, or any pre-determined amount that is agreed upon. The Group Disability Insurance is tax deductible for the employer and is offered by more employers in recent times, by taking the help of third-party disability insurers. The disadvantage with this insurance is that, if the employer pays the premiums entirely while quitting the job, the employee loses the group disability insurance cover.
Long Term Disability Insurance or LTD is insurance with an elimination period of 90 days usually, while the benefit periods can vary between 2, 5 or 10 years up to the age of 65, or even an entire lifetime. Also, a longer benefit period increases the premium amount that is to be paid. And, as the name suggests, Long Term Disability Insurance covers cataclysmic claims that are a result of severe illnesses or disabilities caused (only) at the workplace, that renders an employee unsuitable for his current work. There are different types of disability insurance coverage plans depending on whether an employee is forced to choose another career entirely because of the disability caused, or whether he is able to continue in his current position, without having to make a big career change. Long Term Disability Insurance thus compensates the employee in lieu of his salary, although it is only a portion of the entire salary.
The cost and the associated tax of Long-Term Disability Insurance depend on whether it is paid fully by the employer, paid fully by the employee or if the cost is shared between the two. In some line of work, because the risk of accident or death to human life is high, the measure of coverage is prescribed clearly in company rules as the responsibility of the employer. Similarly, the employee too must have served in the company for a specific period of time before Group Disability Insurance coverage is initiated.
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