What is long-term disability insurance?

Developing a long-term disability is a life-changing event that can have a massive impact on a person. It’s uncertain, scary, complicated, frustrating, upsetting, and so much more.

And when an unexpected setback occurs, the last thing you want to worry about is money. Still, while many long-term disabilities can be treated over time, it does require a strong foundation of financial support.

Long-term disability insurance typically covers 40–60% of an employee’s income in the event of a health issue that keeps them from being able to work for an extended period of time. These benefits usually kick in once short-term disability benefits have run their course – typically after three to six months – and can last anywhere from two to five years or longer. Similar to short-term insurance, long-term insurance benefits do not cover at-work accidents, as those are covered by workers’ comp.

How do employees use long-term disability insurance?

Let’s say your graphic designer was recently diagnosed with rheumatoid arthritis. Although she loves her job, basic tasks like typing are starting to become painful. Over time, even commuting to and from work has started to feel like an insurmountable task. (And she’s not alone in this – musculoskeletal disorders are one the most common reasons for long-term disability, making up almost a third of total claims.)

She’s chosen to push through the pain and discomfort, because she’s among the majority of Americans who can’t afford to miss work for an extended period of time. But she knows that eventually something needs to be done.

Using her short-term disability benefits, she took a couple months off to rest – but it didn’t fix the problem. According to her doctor, she may need to undergo surgery, which will mean another couple months of recovery time. All said and done, she may not be able to return to work for over a year.

This is where long-term disability comes in. Using this benefit, your graphic designer will be able to take the time she needs to rest and recover, without any financial fears.

How do long-term disability benefits impact employees?

A long-term disability can have huge financial impacts. Not only can a serious long-term diagnosis lead to an onslaught of medical costs – but if work isn’t an option, then there goes their income. 50% of people who dealt with a long-term disability without long-term disability coverage needed over 2 years to recover financially. The intense stress from financial instability can have further health impacts, leading to mental health issues and even heart disease.

This probably won’t come as a shock, but few people can go for an extended period of time without a steady income. In fact, 60% of adults in the U.S. don’t have the savings to cover three months of expenses without an income. And almost a third of American adults would struggle to pay an unexpected $400 expense without having to sell something or borrow money from a friend or family member.

Of course, no one likes to think about what would happen if they were out of work for a long time — but it’s actually pretty common. By the time they retire, 25% of workers who are currently 20 years old will deal with some sort of disabling conditions lasting a year.

For employees who may have a preexisting condition or a family history of serious illness, employer-sponsored long-term disability insurance can be a big source of comfort and assurance that their employer is looking out for them.

Why should employers offer long-term disability insurance?

Coping with a long-term disability can lead to significant strain and uncertainty — financially, physically, and emotionally. Suddenly they’re faced with some heavy questions about the future: will their lives ever be the same? How will they be able to afford so much time away from work?

Providing your employees with long-term disability benefits can help alleviate financial worries, so they can focus on their health and (once they’re back in the office) their work. 80% of employers claim that financial stress strongly impacts productivity and costs them dearly. And those worries end up impacting the bottom line; American businesses lose $500 billion every year to the stress caused by their employees’ financial concerns.

By offering long-term disability insurance, you’re telling your employees that you care about their health and wellness, even when they can’t be at work. And that speaks volumes about your company culture.

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