An employer normally purchases a Group LTD insurance policy to cover their employees on a guaranteed issue basis. The employer normally pays 100% of the premium for their employees. The benefit formula is normally 60% of salary up to a stated monthly maximum. Group LTD contracts do not provide full coverage and have contractual and benefit limitations which limit when benefits are payable. Group LTD, however, is a great starting point for disability coverage if available.
Frequently Asked Questions
What is Group LTD Insurance Benefit Formula?
While the benefit payable is usually 60% of salary up to a stated monthly maximum, bonus income and salary above the plan’s covered payroll are not considered, which leaves income unprotected.
Are Benefit Taxable?
Monthly benefits are taxable if the employer pays the premium, therefore a 60% benefit is reduced to a net 48% benefit, assuming a combined federal and state tax rate of 20%.
Is this a replacement for individual disability coverage?
No - Tax-Free individual policy benefits supplements Group LTD benefits and can be taken from job to job, while Group LTD coverage is not portable.
How many employees are needed to qualify for a plan?
We can provide coverage for employers with as few as 2 full-time employees. There are specialized Group LTD contracts available for physicians, Dentists, Veterinarians, Lawyers, CPAs. Architects and Engineers.
