The Best Disability Insurance

Since there are many options for coverage, it makes sense to compare the best disability insurance policies from the best disability insurance companies.

Your paycheck is likely your most valuable asset. You can protect it with individual disability insurance.

If you become disabled and are unable to continue working, your individual disability insurance policy will replace a portion of your lost income in accordance with the policy terms. This important coverage can mean you stay financially secure during a period of disability, which will avoid the need to drain your retirement savings or fall into overwhelming debt.

Your paycheck is likely your most valuable asset. You can protect it with individual disability insurance.
If you become disabled and are unable to continue working, your individual disability insurance policy will replace a portion of your lost income in accordance with the policy terms. This important coverage can mean you stay financially secure during a period of disability, which will avoid the need to drain your retirement savings or fall into overwhelming debt.
You can purchase individual disability insurance from various disability insurance companies.
When comparing disability insurance, check the company’s financial strength. The easiest way to do this is to check what score it received from a credit rating agency like A.M. Best.
You’ll also want to find the insurance company that offers the best disability insurance for your needs.
This can be subjective, as one disability insurance company might offer policy terms that are ideal for one person, but a different disability insurance company might offer policy terms that are perfect for another person. The underwriting policies can also differ – you may receive high rates or even a rejection from one insurance company, but you could receive a great offer from another company.

Before you buy disability insurance, compare disability insurance quotes from multiple insurance companies to find the best match for you.

1. The Coverage Amount

Disability insurance replaces a portion of your income, but how much it replaces varies from policy to policy. For example, some policies might replace 50% of your income; others might replace 70%. That 20% can make a huge difference if you ever need to file a claim.
It’s also important to look at monthly benefit caps. This can be especially important for high-income earners, since the covered percentage of your income might exceed the monthly cap.

2. The Waiting Period

3. The Benefit Period

The benefit period is how long you can continue receiving benefits after you’ve experienced a disability and are unable to work.
Individual disability insurance provides long-term disability coverage. However, there’s a huge range in available benefit periods. Some policies may only pay out for a maximum of two years; others will pay out for much longer periods. It’s possible to buy paycheck protection that will continue paying benefits until you reach retirement age.

4. The Definition of Disability

How the policy defines disability can determine whether a policyholder qualifies for benefits after an illness or injury. Therefore, this is an important aspect to consider when comparing policies.
Take the example of a surgeon who performs delicate operations. If he injures his hand, he might not be able to work, but does a hand injury really count as a disability? The answer depends on how his insurance policy defines disability.
An own-occupation policy defines disability based on the policyholders’ ability to work in the profession they’ve trained for, whereas an any-occupation policy defines disability based on the policyholders’ ability to work in any job suitable for them. There are also variations to these policies, such as modified own-occupation coverage.
For individuals with highly-specialized and demanding jobs, an own-occupation policy can offer the best disability insurance coverage. For other workers, an any-occupation policy might provide more affordable coverage.

5. The Renewal Provisions

When you buy disability insurance, you typically want to keep it for a long time. Securing coverage when you’re still healthy is the best way to lock in good rates. You can then keep this policy for the rest of your career and let it renew each year, meaning you’ll never lose coverage or have to worry about applying for a policy again. However, the renewal provisions will impact your capability to renew your coverage and whether the insurance company can raise rates.
With a guaranteed renewable policy, the policy renews each year. As long as you pay the premiums, the insurer can’t cancel the policy. However, the insurer can raise rates if this rate increase will apply to an entire class of policyholders. This means you can’t be targeted individually, but your rates may still go up.
A non-cancelable policy also renews each year as long as you pay the premiums. The difference is the insurer cannot raise rates. This sounds great, but since these policies can be more expensive, it’s important to weigh the pros and cons when determining whether this option is worth it.

6. The Riders

Riders are policy terms that change the coverage, usually by adding benefits. Adding riders can increase the cost of the policy, but riders can also provide valuable benefits. Selecting just the riders you need allows you to customize the coverage.
There are many different riders are available – different insurance companies may have different options to choose from. Some of the disability insurance riders you might want to consider include:

Survivor benefit riders. The insurance company will pay your beneficiary if you die.
Future increase option riders. Increase your benefits as your income increases without having to undergo additional underwriting.
Cost-of-living adjustment riders. Increase benefits to keep up with inflation.
Retirement riders. Benefits replace payments made to a retirement account, meaning you won’t fall behind on retirement savings during a period of disability.
Student loan riders. These provide benefits for student loan payments to prevent you falling behind on student loan repayment during a disability.

Buying disability income insurance is a great way to take control of your financial future. It’s normal to have a lot of questions about securing the best coverage. We have the answers to some of the most common questions below.

What If My Job Offers Short-Term Disability Insurance?

Some employers offer short-term disability insurance coverage to employees. This is great, but it’s not the same as individual disability insurance. One big difference is the coverage period only lasts for a short period of time – often around six months to a year. Many disabilities last for longer than that, meaning short-term disability benefits may run out long before you are ready to return to work. You can accept the short-term disability coverage that your employer offers and still purchase individual disability insurance on your own.

What If My Job Offers Long-Term Disability Insurance?

Some employers offer long-term disability insurance. Unlike short-term disability insurance, this type of coverage provides a long benefit period. However, it might not offer the best disability insurance coverage for your needs. For one thing, long-term disability insurance offered through a job is usually tied to that job – if you switch jobs, you’ll lose coverage. In addition, you probably won’t be able to customize coverage with the riders and definitions that suit your needs. The coverage might not replace enough of your income, either. You can accept the long-term disability insurance your employer offers and still purchase individual disability insurance to supplement your coverage.

Can’t I Depend on Social Security Disability Insurance?

Social Security Disability Insurance uses a strict definition of disability. Even if a disability is preventing you from earning a paycheck, you might not qualify for Social Security Disability Insurance. In fact, most applicants are rejected. The benefits are also quite modest and may not provide you with enough income.

I’m Healthy – Do I Really Need Disability Insurance?

If you’re healthy, now’s a great time to purchase disability insurance to lock in great rates and terms.

The CDC¹ says that 1.8 million people are diagnosed with cancer each year. The Social Security Administration² says that more than one in four 20-year-olds will become disabled before they reach retirement age.

Disability can come in many forms, including illness, injury, and mental health issues. Disability insurance can’t prevent these conditions, but it can financially prepare you for whatever life throws at you. If you depend on your paycheck, it’s an important coverage.

¹ https://www.cdc.gov/nccdphp/divisions-offices/about-the-division-of-cancer-prevention-and-control.html
² https://www.ssa.gov/disabilityfacts/facts.html

How Much Coverage Do I Need?

The amount of coverage you need will depend on your financial situation. If your income suddenly decreased by 40%, would you manage financially? If the answer is no, you might not want to settle for disability coverage that only replaces 60% of your income. Disability insurance won’t replace 100% of your income. However, it’s important to make sure it covers enough of your income for you to get by if you experience a disability. Riders that offer additional benefits can also help boost your coverage. Another factor to consider is cost. Securing more coverage is great, but if you can’t afford the monthly premiums, a policy that offers less coverage may be a good option. As having some coverage is always better than no coverage, take out whatever you can afford.

Can I Take Out Coverage If I Have Pre-Existing Conditions?

Disability insurance companies usually use medical underwriting when deciding whether to offer someone coverage, meaning you could be denied coverage or charged more based on your medical history. However, don’t assume that people with pre-existing conditions can’t take out coverage! If you have higher risks, you might just need to find the right insurance company for you. Alternatively, you may need to look for simplified issue disability insurance coverage, which provides some coverage without requiring medical exams. Another factor to consider is cost. Securing more coverage is great, but if you can’t afford the monthly premiums, a policy that offers less coverage may be a good option. As having some coverage is always better than no coverage, take out whatever you can afford.

Does Disability Insurance Cover Mental Health Disorders?

Some disability insurance policies provide coverage for mental health disorders. Whether you receive such coverage will depend on the terms of the policy. If this is a coverage you want, look for disability insurance with benefits for mental and nervous conditions that prevent the policyholder from working.

How Much Does Disability Insurance Cost?

Many factors, including the amount of coverage and riders you select can impact the cost of disability insurance. As a rule of thumb, though, disability insurance usually costs around 1% to 3% of the policyholder’s income.

I Want Coverage – What’s the Next Step?

DIS wants to help every working American gain the income protection they need.

Are You a Worker?

If you’re a worker who wants individual disability insurance coverage, an agent can help you explore your options and secure the best coverage for your needs. Find an agent.

Are You an Insurance Agent?

If you’re an insurance agent trying to find the best disability insurance for your client, DIS can help. Get a quote.