Disability insurance is often described as an underappreciated form of insurance because many Americans choose not to take advantage of it, despite the important protection it offers. Long term disability, of course, provides significant income replacement for those who are unable to work because of injury or illness.
The underutilization of long term disability insurance is even more surprising given the fact that many employers offer long term disability in their benefits package. The number of employees taking advantage of long term disability insurance is actually on the decrease. Part of this is because more employers are making long term disability a voluntary benefit, meaning that employees have to pay the full cost, even if at a group discount.
One of the important things to note about long term disability insurance is that it cannot be substituted with Social Security disability insurance. Long term disability insurance has a different purpose than Social Security disability. Although almost 75 percent of workers with long term disability insurance also receive SSDI, the latter has a unique set of requirements. The actual amount of money received through SSDI is relatively low compared to long term disability. Qualification is difficult and does take time as well.
Social Security disability is still a very useful resource, but it should not be seen as a viable alternative to long term disability insurance. Those who are interested in applying for SSDI in addition to long term disability payments can benefit from working with an experienced attorney who can help both in putting together a solid application and handling appeals.
Source: Forbes, “Disability Insurance: The Overlooked Employee Benefit,” Ashlea Ebeling, June 19, 2014.