Group Long-Term Disability (LTD) insurance replaces the majority of your income when you are unable to work due to an illness or injury. Group LTD insurance is arguably the best insurance dollar you will ever spend. Why is it the best…? Because Group LTD provides the best benefit for the lowest premiums of any product…!
You may not realize the potential danger of becoming disabled today, but they are daunting. The U.S. Census Bureau estimates that you have a one in five chance of becoming disabled during your working years age 18-64. One in five… that is not a good percentage. Moreover, the average long-term disability (LTD) absence from work lasts 2.5 years. Quite a long time to survive without a steady income, wouldn’t you say…?
According to an American Journal of Medicine 2009 study, disability continued to be the leading cause of bankruptcies and mortgage foreclosures in the United States, causing nearly 50% of all foreclosures compared to 2% from premature death. The same study reports two-thirds of all American families live paycheck-to-paycheck, and approximately 38% could not afford to pay their bills for more than three months without their income.
Most people believe that their biggest asset is their house and/or retirement savings. In fact, their biggest asset is more than likely their ability to work and earn a living. Consider this example of a 28 year old earning $80,000 annually with a 3% increase in income each year. By the time that person reaches age 65, he or she would have earned $5,293,938. It is doubtful that any other assets that person has accumulated will approach that number.
Rather than purchasing a separate group disability insurance policy, many people believe they can rely solely on Social Security and/or Workers Compensation for protection. Unfortunately, Workers Compensation will only cover a “job related” injury or illness and both Workers Compensation and Social Security benefits are inadequate for any successful professional. The average benefit paid by Social Security Disability Insurance (SSDI) is $1,065 monthly; 8% of SSDI recipients received less than $500 monthly, 52% received less than $1,000 monthly and 97% received less than $2,000 monthly2.
So what are some of the real advantages of Group LTD?
Ø Since the policy is sponsored by the employer, group rates apply. The cost is a fraction of individual coverage.
Ø Most group contracts are guaranteed issue up to a monthly benefit cap of $7,500 a month.
Ø No physicals, blood work or extensive medical questions are required.
Ø Most occupations have benefit periods to age 65.
Ø Many carriers will issue group contracts on as little as two full-time owners and/or employees.
Ø 36 month own occupation definition allows you to receive benefits while working in a different vocation.
Ø Partial disability benefits are payable to disabled employees who return to work part time.
Ø Premiums are waived the month following the date the benefit is paid until the employee returns to work3.
Consider this example:
A 50 year old therapist earning $200,000 a year employs her 45 year old assistant who she pays $30,000 annually. The therapist can buy a $7,500 a month disability benefit to age 65 for herself and a $1,500 a month disability benefit to age 65 for her assistant all for only $225 a month…!4 That is over $1,600,000 of tax-free disability income protection from day one.
So whether you own a small business or you are an employee of one, it makes sense to talk to the decision makers and review some LTD quotes immediately. Group LTD can only be purchased by the employer and it remains one of the most important benefits of every working man and woman today.