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Disability Insurance Terms
"Mandatory" Rehabilitation: Based on the principle that most people want to work in order to lead active, productive lives, a "mandatory" rehabilitation provision encourages disabled employees to participate in rehabilitation efforts whenever appropriate. Such a stipulation allows for termination of benefits if the employee refuses to cooperate or participate with a rehabilitation plan.
Maximum Benefit Period (Benefit Duration): This is the maximum length of time for which benefits are payable under the plan as long as the employee remains continuously disabled.
Maximum Monthly Benefit: This is the highest dollar amount a disabled employee can receive on a monthly basis under the LTD plan.
Mental Illness and Substance Abuse Limitations:. When a disability is caused by a psychological / behavioral / emotional disorder, or by alcoholism or the non-medical use of narcotics, sedatives, and so on, benefits are usually limited to a period of 12 or 24 months unless the employee is confined to a hospital.
Minimum Monthly Benefit. There is usually a minimum amount paid as a monthly benefit after reductions for Other Income Benefits.
Other Income Benefits (Benefit Integration): While disabled, an insured may be eligible for benefits from other sources. Benefits payable under the LTD plan may be offset (reduced) by other sources of disability income such as Social Security, workers compensation, or disability benefits received from other employer-sponsored plans.
Pre-Disability Earnings: This is the amount of an employee's wages or salary that was in effect and covered by the plan on the day before the disability began.
Pre-Existing Condition Limitations:. When an insured has a physical or mental circumstance that existed prior to the date of his or her insurance coverage, it is normally considered a pre-existing condition. Most plans prohibit or reduce disability benefits for any illness or injury for which an employee received medical treatment or consultation within a specified time period before becoming covered under the plan.
Recurrent Disability. The recurrent disability provision is intended to protect an employee who tries to return to work but unfortunately becomes disabled again from the same or a related cause. If this happens within a certain period of time, the employee will be considered disabled from the original disability, and will not be subject to a new elimination period. This encourages an employee to return to work without fear of losing benefits.
Rehabilitation: Rehabilitation means the reinstatement of or improvement in an employee's health and functionality. It usually involves a program of clinical and vocational services with the goal of returning a disabled employee to an active, productive life, and a meaningful occupation if possible.
Return to Work Provision: To promote employees to return to work as soon as they become physically able, an additional enticement is usually provided for a certain period of time, and is called a return to work provision. Under this provision, the employee can receive up to 100 percent of pre-disability earnings based on a combination of disability benefits and return-to-work earnings.
Survivor Benefit:. The survivor benefit is usually a onetime sum payment that will provide benefits to the insured's eligible waiting period can also be the time period between when a disability occurs and when payments from the disability insurance policy begin.)
Waiver of Premium: When an individual becomes disabled and eligible for benefits, no further disability premium payments are required as long as benefits are being paid out.
Workplace Modification or Accommodation: This benefit is designed to provide aid to an employer when a disabled employee requires modification of the workplace or special adaptive equipment in order to return to work. The employer will usually be reimbursed up to a set amount for the cost of such modifications. survivors in the event the insured dies while receiving disability payments. This is an optional benefit in most policies.
Waiting Period: In order to become qualified for coverage under the policy, an individual must satisfy a certain number of nonstop days of service as an active, full-time employee. This is known as the waiting period.
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