Long-Term Disability

Adjusting to life with a newly-acquired disability is difficult enough without adding financial worries to the mix. Unfortunately, many people find themselves dealing with both monetary and physical challenges after an accident or illness has removed their ability to work. Long-term disability insurance, also called disability-income insurance, provides coverage proportional to your pre-disability income, allowing you to focus on recovering and adjusting without the added pressure of looming bills.

What is long-term disability insurance?

In a nutshell, long-term disability insurance provides coverage in the event that an illness or injury makes it impossible for you to work. These policies provide regular monthly, payments—usually 45% to 60% of your previous income.  Policies vary in terms of how long they will provide these payments, some last for only one year, while some provide coverage for as many as ten. Most cease payments when the insured party reaches the age of sixty-seven, as it could be reasonably expected that the insured would be retiring at that age, regardless of the presence of a disability.

Who needs long-term disability coverage?

It would be much easier to name the people who wouldn’t benefit from a long-term disability policy than those who would. In short, if you depend on a regular paycheck from your place of employment in order to pay your bills and are not ready to retire imminently, you should consider taking out a long-term disability policy.

What if I’m unable to perform my current job, but could perform another?

Some long-term disability policies provide coverage if you are unable to work in your current capacity, while others only provide coverage if you are unable to work at all. So, a teacher who is no longer able to stand for long hours in front of a classroom would be eligible for coverage if he carries the first type of policy but may be unable to claim coverage from the second if he is still able to make a living as a tutor.

I have disability insurance through my employer, isn’t that enough?

Maybe. While some employers offer long-term disability insurance, it is much more common for workers to receive short-term disability as part of their compensation package. Short-term disability policies are meant to help you stay on top of bills during your period of recovery, rather than support you for a period of disability that lasts for years, and so only provide coverage for a few months. This may be fine if you need two or three months to recover from surgery, but will likely be insufficient if you find yourself facing an illness of indeterminant length or acquire a disability that is expected to impact your for the duration of your life.

When does my policy kick in?

Most long-term disability policies have a waiting period, called the exclusion period, that begins at the time of the disabling event. This period will vary between carriers, but consumers can expect to wait at least 30, and sometimes as many as 365 days, before receiving coverage—though wait periods of one to three months are most common. This gap between event and coverage is why many people choose to carry short-term disability insurance, which kicks in much earlier, in order to cover the gap caused by the elimination period.

How do I purchase a policy?

Because an individual’s health and lifestyle may impact whether they experience a long-term disability, purchasing one of these policies can be a little involved. Customers can expect to undergo a health exam and an interview with a representative from their insurer.

Before that though, you’ll want to consult an insurance agent who can help you get the best coverage possible, at the fairest price. As always, Moreland’s team of independent insurance agents are here to help you shop for insurance, understand your new policy, and provide support as you file a claim, should the need ever arise.