When HR professionals design a competitive employee benefits package, health insurance, retirement plans, and paid time off usually top the list. However, Long-Term Disability (LTD) insurance is often overlooked—despite being one of the most critical benefits for employee financial protection and organizational risk management.

In fact, according to the Council for Disability Awareness, more than one in four 20-year-olds will experience a disability before retirement age. That means millions of workers are at risk of losing their income for months—or years—due to illness or injury. LTD insurance helps mitigate that risk, offering employees peace of mind and helping employers safeguard morale and productivity.

What Is Long-Term Disability Insurance?

LTD insurance replaces a portion of an employee’s income—typically between 50% to 70%—if they’re unable to work due to a non-work-related illness or injury for an extended period. Unlike short-term disability insurance, which may cover absences of up to six months, LTD plans can offer benefits that last several years or until retirement, depending on the policy.

Why LTD Deserves a Place in Your Benefits Strategy

1. Protects Employee Income and Financial Wellbeing

Most employees don’t have enough savings to cover more than a few months of expenses. A long-term disability can quickly drain emergency funds, forcing workers to rely on credit, downsize their lives, or worse—declare bankruptcy. LTD insurance provides critical income replacement, offering financial stability during what is often a physically and emotionally difficult time.

2. Reduces Pressure on Other Benefits and Leave Programs

Without LTD, employees may try to stretch paid time off, file for early retirement, or utilize other benefit programs not designed for extended absences. Providing LTD creates a structured path for long-term recovery and reduces strain on other internal systems.

3. Attracts and Retains Talent

Employees are increasingly looking beyond base salary when evaluating job offers. A robust LTD plan demonstrates that an employer is thinking about long-term employee wellbeing. In industries where skilled talent is hard to find, offering LTD can help employers stand out and retain key staff.

4. Improves Productivity and Organizational Resilience

Disability-related absences are inevitable in any workforce. With a well-structured LTD plan in place, employers can manage absences more effectively, implement return-to-work programs, and reduce overall disruption to teams and operations.

5. Low Cost, High Value

Compared to the cost of health insurance or retirement match programs, LTD insurance is relatively inexpensive. Many employers offer it on a voluntary basis (employee-paid), while others subsidize part or all of the premium. Either way, the value it delivers—in terms of financial security and peace of mind—is considerable.

Common Misconceptions About LTD Insurance

Some HR teams assume that workers’ compensation will cover extended disabilities. But workers’ comp only applies to work-related injuries and illnesses, which account for a small percentage of disability claims. Most long-term disabilities are due to chronic illnesses, cancer, or musculoskeletal disorders—conditions not covered under workers’ comp.

Others believe Social Security Disability Insurance (SSDI) is sufficient. However, qualifying for SSDI is notoriously difficult, and benefits are limited in amount and scope. LTD insurance provides a far more reliable and accessible safety net.

Best Practices for Implementing LTD Coverage

Here are some best practices for implementing LTD coverage;

• Offer employer-paid or base-level coverage with the option for employees to buy up to a higher benefit level.
• Educate employees on the importance of LTD, especially younger staff who may not recognize the value until it’s too late.
• Align LTD with your overall wellness and leave strategy, including mental health support and short-term disability.

Final Thoughts

Long-Term Disability insurance may not be the flashiest benefit in your package, but it can be a lifeline for employees facing serious health challenges—and a smart, cost-effective way for employers to support workforce resilience.

For HR professionals aiming to design meaningful, future-focused benefit plans, LTD insurance isn’t optional—it’s essential.

Need help structuring the right LTD benefit? HUB Southwest specializes in employee benefits consulting throughout Arizona and New Mexico. We can help you evaluate plan options, communicate value to employees, and build a benefits strategy that truly protects your people.