Number of workers obtaining long term disability coverage decreasing

Long term disability insurance is an important resource for workers to have in the event they become injured and unable to work for long periods of time. Such insurance can be purchased privately, but many employers either have it available from their employer automatically or have the ability to purchase it through an employer at a group discount.

Given the importance of long term disability, one would think that more Americans would take advantage of such insurance, but many do not, and the number of Americans who do have such insurance is actually decreasing. Part of this is because more employers are converting long term disability insurance as an optional benefit, which means employees have to pay for it. But some of it is due to other reasons.

One possible reason that many do not take advantage of long term disability coverage is the assumption that they will be eligible for Social Security disability if they are injured. This is not a good assumption to make, though, since the degree of injury or illness must be quite serious before one qualifies for SSDI, and even those who do qualify often wait a long time to being receiving benefits.

Those who do take advantage of long term disability need to understand that long term disability insurance does not cover work-related injuries covered by workers' compensation insurance. Workers' comp is a form of coverage employers must provide to their employees, and is also an important resource for those injured on the job. In some ways, workers' compensation and long term disability insurance are complementary resources for workers' to have in the event of injury. More people really ought to consider obtaining rounding out their coverage with long term disability insurance.

Source: Forbes, "Disability Insurance: The Overlooked Employee Benefit," Ashlea Ebeling, June 19, 2014.