Where to Find the Best Long-Term Disability Insurance
People will often tell you to “shop around” when you’re considering making a big purchase, as doing so can help you to save money. This advice is especially useful if you’re considering buying a short- or long-term disability insurance policy.
There are plenty of insurance companies out there competing for your individual insurance business, and each will provide different levels of coverage for different prices. Your monthly premium will depend on your insurance carrier’s assessment of your individual circumstances, and the specifics of your coverage will vary significantly from one company to the next.
So, it’s worth doing in-depth research to ensure you’re getting the best value for your money.
Why You Need Long-Term Disability Insurance
Disability insurance, whether short- or long-term, replaces a percentage of your working income for the duration of any illness or injury that renders you unable to work. Short-term disability coverage usually offers benefits for a maximum of six months following a successful claim. Long-term disability insurance can continue paying monthly benefits until you reach normal retirement age, if you remain disabled for that long.
Coverage of this type is useful for anyone who’s reliant on their working income, as the alternative income replacement options for disabled individuals come with significant limitations.
Social Security Disability Insurance (SSDI) benefits generally replace a much smaller percentage of your income than monthly benefits from individually purchased or employer-sponsored group disability insurance. Also, SSDI is only available to claimants with a total disability who cannot work at all.
Workers’ compensation may be available to you if you became disabled due to an injury or illness you sustained at work, or because of your job. However, if your disabling condition is unrelated to your workplace, you will not be successful in a workers’ compensation claim. Also, the benefits available through workers’ compensation vary significantly from one state to the next.
What Sets the Best Long-Term Disability Insurance Apart?
Deciding which insurance company or policy is the best for your needs can be difficult. There are some factors you should always keep in mind when weighing one option against others.
In all cases, it can be beneficial to consult with an expert long-term disability insurance attorney prior to purchasing a policy to ensure you’re not missing any important details.
Price
Long-term disability coverage can get expensive if you choose a policy with a lot of bells and whistles. Many of these extras will be unnecessary for most people. When you’re selecting a disability policy, try to make sure you’re not paying for anything you don’t need.
Definition of Disability
There are two main categories of disability insurance definitions; these are called “own occupation” and “any occupation.” The more generous “own occupation” definition treats you as disabled once your illness or injury prevents you from carrying out the essential duties of the occupation you had directly prior to the onset of your claim. These policies entitle you to monthly benefits even if you’re capable of working in a different full- or part-time job. These policies permit you to take up a different occupation and continue to receive your full monthly disability benefits.
“Any occupation” policies, on the other hand, only treat you as disabled once your sickness or injury prevents you from doing any occupation for which you are trained, educated, or suited. This overbroad definition comes cheaper than its “own occupation” equivalent. “Any occupation” policies are common in employer-sponsored ERISA disability insurance policies. Talk to a Chicago ERISA lawyer for more advice.
Waiting/Elimination Period
The waiting or elimination period is the length of time you’ll have to wait to start receiving monthly benefits following the onset of a disabling illness or injury. These periods vary significantly from one policy to the next. Employer-sponsored group plans usually have waiting periods of 180 days, while individually purchased policies can have much shorter periods, although the elimination periods on some individually purchased plans can be longer. A short elimination period results in more expensive premiums for individual disability policyholders.
Extent of Coverage
Different plans replace different percentages of your working income in the event of a successful claim. Insurers do not offer plans that replace 100% of your income, but some policies can pay as much as 80%.
It’s worth noting that the money you receive from an employer-sponsored ERISA disability claim is usually considered taxable income if your employer paid the premium. This generally is not the case with individually purchased policies, where you pay and the monthly disability benefits flow to you to take free.
Duration of Coverage
Some long-term disability policies will continue paying monthly benefits for as long as you remain disabled or until you reach normal retirement age. However, this isn’t always the case. Insurers offer policies with a 2-year, 5-year, or 10-year time limit on benefits payments. Short-term policies generally provide benefits for a maximum of normal retirement benefits or contracts six months after the onset of a disabling illness or injury.
Where to Start Looking
You can purchase long-term disability insurance from different types of agents or brokers. The source from which you buy your policy can make a big difference in terms of the deal you end up with.
Traditionally, most people went to local agents for their insurance needs, and this remains an option. Licensed insurance agents can sell all kinds of coverage, but you may be better off finding one who specializes in short- and long-term disability insurance policies.
In more recent years, a significant percentage of insurance policyholders have chosen to purchase their coverage online. However, disability insurance lags behind other types of insurance in terms of its availability on the internet. That said, there are various online platforms you can use to find the right policy with all the features and benefits you need.
There are generally fewer companies offering individual disability insurance than there were a number of years ago. The opposite trend has emerged in the life insurance industry, with more companies offering this type of coverage than ever before. However, it is still be possible to find the ideal long-term disability policy for your needs, if you’re willing to invest time and consideration into the research process.
The long-term disability insurance landscape is a highly complex one in many ways. If you’re feeling overwhelmed by the process of purchasing a policy, or by a claim or appeal issue, we can help. Contact DarrasLaw today to schedule a free initial policy analysis, claim assistance, or administrative help.