Q: What is Long Term Disability?
A: It is an ‘income-replacement’ benefit!
It works this way:
- The LTD benefit is equal to two-thirds of the employee’s monthly earnings.
- Assume an employee becomes ‘totally disabled’ from an accident or a sickness.
- The insurance company pays the LTD benefit amount to the employee for as long as he/she remains totally disabled, up to age 65.
- The LTD benefit amount increases each year, based on inflation.