Life & Health Insurance Practice Exam 2026 – Your All-in-One Guide to Exam Success!

In Group Long Term Disability (LTD) plans, the maximum benefit percentage is typically set at 66 2/3% for lower-paid employees. This percentage strikes a balance between providing adequate income protection while still managing the insurance carrier's risk. The rationale behind this amount is that it allows employees to maintain a substantial portion of their pre-disability income after they become disabled, which is particularly important for those on lower wages who might rely heavily on their income to cover living expenses.

Setting the benefit at 66 2/3% also reflects industry standards and is designed to help prevent the risk of employees being incentivized to remain off work longer than necessary, a situation that could arise if a higher percentage were offered. By establishing this cap, employers and insurers can help ensure that the benefits support the employees adequately without overincentivizing prolonged absence from work.

This structure aligns with regulatory guidelines and best practices in the industry, making it a widely accepted approach among employers who offer Group Long Term Disability benefits.