Long-Term Disability (LTD)
Long-term disability benefits are paid out by an insurance company to replace part of a policyholder’s income while he or she is rendered disabled and cannot complete some or all of the responsibilities of his or her job. The insurance company will pay a monthly benefit until either the individual recovers, or the benefit period is over. The length of the benefit period depends on the amount of coverage purchased by the policyholder, so more coverage = a longer benefit period.
Social Security Disability Insurance (SSDI)
If you can’t afford long-term disability insurance, you may be eligible for social security disability insurance. Although these benefits are covered by tax money, they are oftentimes lower than private disability insurance. SSDI benefits are also more difficult to qualify for. To receive benefits, you will have to meet a definition of “disability” that is much stricter than most LTD policies. It’s also important to note the lengthy application process, and the fact that the majority of applicants’ disabilities are deemed not severe enough to receive benefits.
Social Benefits Offset Rider
However, there is a way to receive SSDI benefits if you have an LTD plan and are interested in lowering your rates. The social benefits offset rider will allow you to apply for SSDI benefits, and then should you receive them, your insurance provider will accordingly reduce your benefits. For instance, if your LTD policy pays you $4,000 each month, and then you receive SSDI benefits for $2,000 each month, your LTD policy will now pay you $2,000 per month. Your total benefit amount will remain the same, but the social benefits offset rider can help keep your premiums lower, since your insurance provider is spending less money.
If you have questions about applying for long-term disability insurance or the social benefits offset rider, you can contact us here.