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The greatest asset that you and your employees own is your ability to earn a living. If that ability were lost due to an accident or illness, few people would be able to survive long. Disability insurance covers your income and your employee’s income. There are two kinds of disability coverage:
Long Term Disability (LTD), Short Term Disability (STD). These two coverage’s are designed to work together to provide maximum protection.
LTD Long Term Disability insures income up to an employee’s age 65 or normal Social Security retirement age. It has an elimination period, which is like a deductible in a medical plan. The benefit is some percentage of pre-disability income. Benefits are paid monthly.
STD Short Term Disability provides income protection of the elimination period of the LTD plan. The elimination period is relatively short. Benefits are paid weekly.
Elimination period The elimination period is the first days of a disability. Examples of LTD elimination periods are 30 days, 90 days, 180 days. During the elimination period no benefit is payable. Examples of STD elimination periods are 0 days, 7 days, 14 days, and 30 days.
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