Seema Gakhar serves as an insurance agent through Hub Financial, a managing general agent (MGA) in Toronto, Ontario. Dedicated to caring for her clients like family, Seema Gakhar works to help individuals secure long-term disability insurance to protect their livelihoods and loved ones in the case of unexpected illness or injury.
Although the average work absence due to a disability is approximately 34.6 months, or just under three years, short-term disability policies may pay out for only three to six months. Because many people cannot afford to live the remaining two years or more without income, long-term disability insurance exists to fill in the gap.
In most cases, long-term disability insurance becomes active after a person's short-term policy expires. It then pays approximately 50 percent to 70 percent of the individual's salary, or another amount specified in the policy, assuming that the person is fully disabled and unable to work.
Benefits may be different if the policy holder is only partially disabled and thus can work in a lower-paying job. Individuals who earn less than 20 percent of their former income can usually still receive full disability benefits, though insurers pro-rate payouts for those who earn 20 percent to 80 percent of their pre-disability earnings.
Duration of benefits also depend on the specifics of the policy. Certain plans may pay continuously until the individual reaches the standard retirement age of 65, though others may have a limitation of five to 10 years. Premium payees also vary, as some policies charge employers in full or in part, while others place the onus of cost on the individual.
