What to consider for LTD insurance

Paige

LTD insurance is a new one for me...

What thinks should we look at when reviewing LTD policies? What's standard? What's premium? Anything to look out for in contract provisions?

Thanks for your help!
Paige

Tarri Akerman

elimination period (amount of time to wait before benefit kicks in)90 days might be a good start

66 2/3% of salary is probably the highest amount you'll find

benefit period (amount of time benefits will be paid) genrally 2 yr./5 yr. and to Social Security Normal Retirement Age.

You may wish to class out employees in 3 classes with varying benefit periods for example: salaried - 2 yrs./management - 5 yrs. and executives - to normal retirement age.

The occupational definition is something you'll want defined...own occupation means the material and substantial duties of your OWN occupation...most definitions are ANY occupation: if able to perform ANY occupation, benefits may not be payable.

The longer the waiting period and shorter the benefit period, the lower the rates.

Hope this helps.

skyrocket

[font size="1" color="#FF0000"]LAST EDITED ON 07-28-03 AT 12:01PM (CST)[/font][p]You should also consider whether the policy will be employer paid or employee paid. If the premiums are employer paid, benefits are considered taxable income. If the employee pays the premiums, benefits are non-taxable. (At least in the state of California).

If you request a quote for employee-paid premiums, you will likely get a higher premium from the company than if the employer pays the full cost (adverse selection issues). What you can do, is make it employee-paid, gross up the income to reflect the cost. If you do so, you MUST INFORM THE CARRIER so they know what is going on.

In addition, if any of your employees are interested in purchasing any individual policies, you MUST have those in place before you purchase the group plan. As I recall, individual policies may not be issued if there is existing group policy in place. Group policies on the other hand, are not as restrictive in looking at existing private/individual policies.

Ask your broker about the above and any state restrictions.

Nat

If you have a good broker, he/she will know what to look for in an LTD. My suggestion is to look at employer paid only, if your co. can afford it. Usually with employer paid the group is exempt from health questions and can't be denied coverage. LTD is very affordable. You need to decide what waiting period you as a company want, i.e. 60 day, 90 day, etc. Of course the longer the waiting period the cheaper the policy, usually. Also look at the maximum monthly salary payout, i.e. ours is 60% of $5000. Look for the rating. I would not go with a company with less than an A+ rating - get a better one if possible. If you don't have a Short Term Disability Plan, you might want to make the benefit waiting period shorter rather than longer. It has been my experience that LTD policies are pretty standard across the board. You might look at a voluntary LTD in addition to an employer paid, if you feel it is necessary. The Standard, Fortis, UNUM, Met Life, Jefferson Pilot and Hartford are all excellent LTD carriers. I have worked with The STandard, Fortis and Jefferson Pilot. All very affordable and have excellent ratings. Of course, if you have a broker, he/she will know the companies that may better fit your company. Good Luck.