Disability Insurance: What Are My Options?

Long Term Disability

Knowledge is power when it comes to understanding how much income protection you may need.

You’ve decided that you need disability insurance. Whether you’re supplementing existing employer coverage or starting with your own individual policy, ask yourself these questions before deciding how much income protection you should have:

  1. How much income would you need to replace? Most policies cover between 50% and 70% of your income. When considering how much coverage you need, factor in both immediate and long-term expenses, as well as any other sources of income such as investment income and state or employer disability income benefits.  Consider whether you’ll want to continue funding your retirement needs.
  2. For how long could you survive without your paycheck? When would you need your benefits to kick in? The “elimination period” is the amount of time you are required to wait after a disability occurs before you can receive benefits. It ranges from as short as 30 days to 90 days, or longer. Longer elimination periods generally translate into lower premiums. Determining how long you could afford to meet your immediate needs can help you find the sweet spot.
  3. How could a disability change your expenses? A disability can have serious financial consequences unrelated to your income. Additional expenses caused by an accident or illness may include in-home care and equipment, physician and hospital copays, and other medical costs not covered by insurance. You may want to add a cushion for this possibility.
  4. Could you claim benefits if you work in another profession? Some plans pay claims if you can no longer perform the duties of your current occupation – “true own-occupation” – while other plans will pay benefits only if you are unable to perform the duties of “any occupation.” A true own-occupation policy allows you to claim benefits even if you choose to work somewhere else. An “any-occupation” policy won’t pay benefits if you have the ability to work another occupation, regardless of whether you actually take another job. An LTD advisor can help you understand the nuance, and how LTD insurance typically covers your profession.
  5. How long would you like benefits to last? Your benefit period can typically last for between one and five years, up to age 65, or even for life. The benefit period you select will directly impact your premium—the longer the period, the higher the premium. Consider where you are in your career. You could miss out on millions in income if it suddenly stops due to illness or injury.
  6. Are you a business owner? You may face an additional set of problems should you – or a key employee – become disabled. From executive benefits packages to Business Overhead insurance, learn how you can also help protect your business.

The average U.S. disability claim is 34.6 months.1

Once you determine how much income protection you will need, and how much you can afford to spend on premiums, you’ll be much better equipped when you’re ready to apply.

Learn more about Long Term Disability insurance


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