If you have a long term disability policy, look closely at the policy to see whether there is a provision that requires you to apply for Social Security Disability benefits. Disability insurance is intended to replace part of your income and it is not intended that you will receive 100% of your pre-disability income from all sources including Social Security Disability.
One of the reasons that all long term disability policies require an off set for Social Security Disability benefits, is to prevent you from getting 100% or more of your pre-disability earnings. However, the real reason is that the Social Security Disability offset allows employers and employees to purchase affordable group long term disability benefits. According to the American Council Life Insurers, estimates show that without offsets the premiums for group disability insurance would be increased by at least 40% and even up to 100%.
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Quite frankly, long term disability attorney Nancy Cavey rather not see a Social Security Disability offset in any policy, even if it means increased premiums. Would that mean that fewer people would have group insurance benefits? Probably, but once a long term disability applicant understood the impact of the Social Security Disability offset, they would understand that why it is wiser to pay an increased premium than to have a reduction in the Social Security Disability benefits. Unfortunately, Social Security Disability offsets will rob many policy holders of their peace of mind who that they purchased a long term disability policy to provide them with income replacement. The reality is that it is only a replacement ratio of pre-disability income and Social Security will contribute to satisfy that replacement ratio.