Long-Term Disability Insurance (LTD)

Other Disability Insurance Policy Options

In addition to different waiting periods, benefits periods, and benefits rates, which are described earlier in this article, Long-Term Disability (LTD) Insurance policies can vary in other aspects. These details are important because they can have a major impact on your benefits if you become disabled.

Definition of Disability

Disability income insurance providers think about disability in two ways:

  1. Own-Occupation Disability (or “Own Occ”) means your disability prevents you from performing your own occupation, which means that you are unable to do the work or job you have been trained to do and have experience in.
  2. Any-Occupation Disability (or “Any Occ”) means your disability prevents you from performing any occupation
    • Sometimes Any Occ means that your disability prevents you from performing any occupation that pays at least a specified percentage of what you earned before your disability.

Own-occupation insurance policies pay you if you are unable to perform your own occupation, even if you are able to get a different type of job. They have higher premiums than policies that require you to be unable to perform any occupation.

Trial Work Period

Policies may allow you to return to work on a trial basis. For example, your policy may give you a two-week trial period. If you go back to work for less than two weeks and then find that you can’t do your job because of your disability, the policy would allow you to continue your benefits as if you hadn’t returned to work. If you are able to return to work and then you find that the same disability again prevents you from doing your job, your policy may or may not require another waiting period.

Part-Time Work

Some plans allow you to return to work part-time while continuing to pay your benefits. This is usually referred to as a “residual” or “loss of earnings” benefit. When an employee returns to work part-time, wages for hours worked are paid by the employer and LTD replaces the regular hours not worked at the pay replacement level.

For example, if you worked eight hours per day before your disability, and you are able to return to work four hours a day, the disability income insurance policy may replace some of your income for the other four hours.

Changes to Your Premium

Under noncancelable policies, your policy cannot be canceled as long as the required premiums are paid on time.

Under guaranteed renewable policies, your premium can be raised, but only if the change affects an entire class of policyholders. Initial premiums for guaranteed renewable policies can be less expensive than noncancelable policies.

Other less expensive policies that don’t have premium or renewability guarantees are also sometimes available.

Cost of Living Adjustment (COLA)

Some LTD policies allow you to buy a cost-of-living-adjustment (COLA) to add to your basic disability income coverage. This additional benefit raises the income you get from your insurer by a certain percent each year. For example, if you become disabled and are unable to work, the COLA will gradually raise your benefits to match the higher prices of rent, food, utilities, medical, and other expenses.

Many policies don’t include a COLA, but do allow you to buy additional coverage over time as your household expenses go up. However, if you do this, you may have to undergo additional medical underwriting.


Many policies will not cover disabilities caused by suicide attempts, drug abuse, war, or attempts to commit a crime. Pre-existing conditions are also frequently excluded, as was discussed earlier in this article. On-the-job injuries, which are covered by Workers’ Compensation insurance, are also not covered.

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