Group LTD – A Financial Time Bomb

Relying solely upon employee benefits will economically cripple an individual if that person were to suffer a total disability due to illness or injury before retirement. Consider an employee with the following benefits:


  • Group LTD – 60% of income to $5,000 per month
  • Group Life/AD&D – benefit of two times income
  • Group Medical Insurance – comprehensive coverage
  • Annual income of $120,000

At first glance, this appears to be a solid, appropriate employment package, but it is severely flawed. Focusing on the provided disability benefit, as per this example, the employer deducts the Group LTD premiums from corporate taxes, and therefore, any claimed benefits would be taxable. Since the plan has a maximum benefit of $5,000 per month, benefits have a beginning limitation of only 50% of employee income.