Long-Term Disability Insurance Terms

Active Employment: Working for an employer on a permanent full-time basis, working the minimum number of hours specified in the long-term disability contract, and working at the employer's usual place of business.

Active, Full-time Employee: An individual who works for an employer on a regular basis in the usual schedule of the employer's business. This is usually a requirement for coverage in most long-term disability policies. Usually, a minimum number of hours of regular work is specified.

Any Occupation (Any Occ): A definition of disability where an insured employee is considered disabled only if he or she is unable to work in any occupation for which he or she is qualified by education, training, or experience. This is closely related to the definition that the Social Security Administration (SSA) uses in determining disability.

Attending Physician Statement (APS): A report filled out by the insured employee's treating physician that documents patient's current health and past medical history. An APS is used by the insurance company to evaluate a long-term disability claim.

Benefit Percentage: The percentage of the insured's predisability income that determines the amount of benefits payable, up to an overall maximum benefit amount.

Conversion Privilege: An option in some long-term disability (LTD) policies that allows employees who are terminating employment (usually not being discharged) to continue some or all of their LTD coverage at their own expense without submitting evidence of insurability.

Definition of Partial/Residual Disability: The definition of disability that applies when an insured employee is able to return to work part-time -- or even full-time with a loss of earnings. If the employee is working in this limited capacity and is earning less than a certain level of income, he or she will still be eligible for limited benefits under the long-term disability plan. Not all disability insurance carriers use this terminology to describe a "part-time" work situation, but most provide some type of partial benefit to encourage return to work.

Definition of Total Disability: The definition of disability that will be used to determine an employee's eligibility for benefits.

Elimination Period: The period of time between the date the disability commences and the beginning of the benefit payment period. It is the period during which an employee must be disabled before payment of benefits begins. It is sometimes referred to as the qualifying period or waiting period.

Evidence of Insurability: Medical or financial information provided by an applicant for long-term disability as proof to the insurance company that he or she is insurable. Group disability coverage is generally sold as "guaranteed issue," meaning that evidence of insurability is not required, but it can be required under certain circumstances (for example, late enrollment or a high benefit maximum).

Exclusions: Specific provisions included in group disability plans that exclude coverage (payment of benefits) in certain situations. Typically, a plan will not pay benefits for disabilities arising from injuries that are self-inflicted or caused by participation in a felony, war, or riot.

Family Care Expenses. Partial reimbursement for certain expenses incurred for family care, this is often an optional benefit under most long-term disability policies. Because a disabled employee with family care responsibilities may need extra help when trying to return to work, this type of benefit provides an incentive to the employee who is taking part in a rehabilitation program.

Indexing: Increasing (or decreasing) benefits to provide some protection against inflation. After the first year of disability, a disabled employee's pre-disability earnings are usually increased (or indexed) by a certain percentage, on an annual basis.

Limitations:. Specific provisions included in group disability plans that limit coverage in certain situations. Often only limited benefits are payable for specific conditions or under specific circumstances (for example, mental illness and pre-existing conditions).

"Mandatory" Rehabilitation: A provision in a long-term disability insurance policy that strongly encourages disabled employees to participate in rehabilitation and allows the insurer to terminate benefits if the employee declines to participate in rehabilitation.

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