Long-term disability insurance replaces employees' income when they are unable to work due to a long-term disability or sickness. It protects people against financial difficulty and income loss. The coverage usually begins with a waiting period, known as the elimination period, and lasts for a set amount of time. The benefit amount is often a proportion of the employee's pre-disability earnings. This insurance promotes financial stability and covers ongoing expenditures when employees are unable to work.
Example
A policy offered by an employer to its workers as part of their benefits package. Assume John, an employee, is injured and unable to work for a lengthy period of time. After a 90-day waiting period, his long-term disability insurance kicks in. The coverage covers 60% of his pre-disability earnings. As a consequence, John receives monthly benefit payments to assist replace a major amount of his lost income, allowing him to pay his expenses, feed his family, and maintain his level of life while recovering. Long-term disability insurance provides him with financial stability and peace of mind as he recovers and eventually returns to work.
