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Long-Term Disability Insurance (LTD)


The term long term disability insurance refers to a policy that protects an employee from the loss of income if they are unable to work due to an illness or accident. Long term disability insurance (LTD) is a benefit offered by employers which provides supplemental income when short-term benefits expire.


To help protect their employees from a financial hardship, employers can choose to offer long term disability benefits. This insurance provides the employee with a source of continuing income in the event an illness or injury prevents them from returning to work for an extended period of time.

The amount of coverage typically varies from 50% to 75% of the employee’s base salary. This benefit can be paid on a pre-tax or after tax basis. Some employers will provide employees with basic coverage (50%) and give the employee the option to purchase additional coverage. The policy may stop paying benefits after a predetermined amount of time, or when the employee reaches normal retirement age. Work-related injuries and illnesses may be covered under a workers’ compensation insurance policy. Under these conditions, the employee may not be eligible for LTD benefits.

Long term disability coverage is considered an important element of a comprehensive employee benefits program. As is the case with life insurance, LTD is considered a valuable benefit by many employees since it protects their family from a financial hardship.

Related Terms

disability insurance, COBRA, flexible benefits plan, long term unemployment, short-term disability, workers’ compensation