What is the LTD percentage and maximum monthly benefit?

AAM Phase 1 Test Introduction: Study with flashcards and multiple choice questions, each question has hints and explanations. Master the test and excel!

Multiple Choice

What is the LTD percentage and maximum monthly benefit?

Long-Term Disability benefits are designed to replace a portion of your earnings after you can’t work. The amount is usually a percentage of your pre-disability earnings and there’s a monthly cap so costs stay manageable for the insurer. In many plans, the replacement rate is 60% and the maximum monthly benefit is $10,000. So you receive 60% of what you earned before you got disabled, but never more than $10,000 each month. For example, if your pre-disability monthly earnings are $8,000, the payout would be 0.60 × 8,000 = $4,800. If your earnings are $18,000, 0.60 × 18,000 = $10,800, but the benefit is capped at $10,000. Some plans also offset these benefits by other income you receive, like Social Security disability benefits, which can further reduce the monthly amount.

Long-Term Disability benefits are designed to replace a portion of your earnings after you can’t work. The amount is usually a percentage of your pre-disability earnings and there’s a monthly cap so costs stay manageable for the insurer. In many plans, the replacement rate is 60% and the maximum monthly benefit is $10,000. So you receive 60% of what you earned before you got disabled, but never more than $10,000 each month. For example, if your pre-disability monthly earnings are $8,000, the payout would be 0.60 × 8,000 = $4,800. If your earnings are $18,000, 0.60 × 18,000 = $10,800, but the benefit is capped at $10,000. Some plans also offset these benefits by other income you receive, like Social Security disability benefits, which can further reduce the monthly amount.

More practice questions