Why HR leaders can't overlook the importance of long-term disability insurance.

Every day, millions of employees go to work assuming their employer-sponsored benefits will protect them if the worst happens. They plan their futures—buying homes, raising families, saving for retirement—believing their ability to earn a paycheck is secure. Yet behind this confidence lies an unsettling truth: when serious illness or injury strikes, many employees realize that their income protection isn’t as strong as they thought.

Long-term disability (LTD) insurance, a critical benefit designed to replace income during extended periods away from work, is either missing or inadequate for a significant portion of the American workforce. The result? Employees face not only the devastating realities of poor health but also the unexpected and overwhelming burden of financial hardship—precisely when they are least able to handle it.

Here’s what the data tells us:

• Only 38% of U.S. workers have access to employer-sponsored long-term disability (LTD) insurance.
• In the private sector, access drops even further to just 34%.
• Many employees falsely believe they have coverage—or misunderstand its limitations, according to DOL ERISA Advisory Council testimony.
• Meanwhile, Social Security Disability Insurance (SSDI) approval rates hover around 30%, and even approved benefits are often insufficient for basic living expenses.

The result? Employees who become disabled often face a sudden income loss with little to no safety net—at a time when they are most vulnerable.

Why is long-term disability insurance important?

Disability isn't a rare or remote risk. According to the Social Security Administration, a 20-year-old has a one in four chance of developing a disability before reaching retirement age.

Without LTD coverage, employees face serious financial risks:

• Loss of their primary income source
• Inability to keep up with mortgage, rent, and basic living costs
• Rising debt loads—often from medical debt—and depleted retirement savings
• Increased mental health strain, complicating their recovery

Long-Term Disability (LTD) insurance acts as a financial lifeline:

• Replaces up to 50–70% of an employee's income after an extended illness or injury
• Helps employees maintain financial independence during recovery
• Provides peace of mind to both the employee and their employer

Without it, even a short-term health crisis can spiral into a long-term financial disaster.

Which types of workers benefit most from long-term disability insurance?

While every employee can benefit from LTD protection, certain groups are particularly vulnerable without it:

High-income earners

Executives, physicians, attorneys, CPAs, and other types of high earners often exceed the monthly caps found in standard LTD plans. Basic employer policies typically replace income only up to a set maximum, often around $5,000 to $10,000 per month. For these professionals, this cap can leave a significant income gap, making supplemental LTD coverage an important consideration to fully protect their financial stability.

Self-employed professionals and business partners

Self-employed professionals face a different risk. Many are not automatically covered under employer-sponsored plans and may not realize they are without income protection. Without individual LTD policies, these individuals are fully exposed to the financial consequences of an extended disability.

Employees supporting families

Expenses like mortgage payments, childcare costs, and college tuition don't pause if an employee can no longer work. A sudden income loss can have a devastating ripple effect on a household’s financial security, making LTD coverage essential for family breadwinners.

Employees in physically or mentally demanding jobs

Employees in physically or mentally demanding roles are statistically more likely to experience a disability. According to the Council for Disability Awareness, conditions such as cancer, musculoskeletal injuries, mental health disorders, and cardiovascular diseases are among the leading causes of long-term disability. For workers in roles that place physical or psychological strain on the body, having LTD coverage is a critical safeguard.

Take action: How HR can strengthen LTD coverage

As an HR leader, you can close the coverage gap—and protect your employees—by taking these strategic steps:

1. Audit your current LTD offering

• What percentage of salary is covered?
• What is the maximum monthly benefit?
• Is the benefit taxable or tax-free?
• How long is the elimination (waiting) period?

Broker Tip: Review whether high earners are adequately protected and whether gaps exist for specific employee groups.

2. Align LTD with FMLA and other leave policies

• Ensure that employees on FMLA who extend beyond 12 weeks have income protection via LTD.
• Clarify policies for medical, parental, and personal leaves that may transition into disability claims.

Broker Tip: Work with compliance teams to streamline communication about how LTD kicks in after FMLA.

3. Offer or recommend supplemental LTD

• Provide voluntary buy-up LTD options during open enrollment.
• Offer individual disability insurance (IDI) options for executives and high earners.

Broker Tip: If employer budget is a concern, voluntary (employee-paid) supplemental plans are a cost-effective way to close gaps.

4. Educate employees year-round

• Include LTD education during new hire onboarding.
• Offer webinars or explainer sessions during open enrollment.
• Highlight real-life scenarios where LTD prevented financial hardship.

Broker Tip: Use clear examples and storytelling to make the risk tangible.

Take the next steps on long-term disability insurance

Offering long-term disability insurance isn’t just checking a compliance box—it’s making a commitment to your employees’ long-term financial well-being.

By strengthening your LTD strategy, you're not only protecting individuals, you're reinforcing trust, loyalty, and resilience across your workforce. In today’s competitive market, that's a benefit no organization can afford to overlook.