long-term disability insurance quotes

When you’re shopping for disability insurance, one of the first things you’ll want to know is the cost. Since disability insurance premiums can vary significantly by company, receiving several long-term disability insurance quotes is the best way to find out what you’re likely to pay.

However, long-term disability insurance quotes can tell you a lot more than just the monthly premium. Disability insurance is highly customizable. As different disability insurance companies offer different benefits, you can select the options that fit your needs. This is great, but it also means that comparing two different policies can be a little like comparing apples to oranges. If you select a plan based on the monthly premium alone, you might not get as good a deal as you expect.

Before comparing disability income insurance quotes, take a moment to think about your needs. Here are several key considerations.

Long-Term vs. Short-Term Disability Insurance

Before we compare long-term disability insurance options, you need to clear about the difference between short-term and long-term disability insurance.

Many employers offer short-term disability insurance. It replaces a portion of the worker’s income if the worker experiences a qualifying disability. However, it’s only designed to cover disabilities that last a limited period of time – benefits typically stop after about six months to a year no matter if you’re not ready to go back to work.

Some employers also offer long-term disability insurance, but you can also purchase individual disability insurance on your own. The advantage to receiving work-based coverage is you can enjoy discounted group rates and simple underwriting. However, individual disability insurance offers more flexibility, meaning you can customize coverage to your needs. Plus, it’s portable, allowing you to take it with you if you change jobs.

Even if your job offers you long-term disability insurance, you can purchase your own supplemental policy to gain more robust coverage. However, the majority of workers don’t even have the option of work-based disability insurance coverage because their employers don’t offer it. To protect themselves, workers need individual disability insurance – that’s the main type of coverage we’ll discuss here.

Comparing Long-Term Disability Coverage Options

To compare long-term disability quotes, you need to understand some of the policy differences. If you’re new to disability insurance, this can be overwhelming at first because there are MANY different elements to consider – from what counts as a disability to long how benefits last and how much coverage you’ll receive. And that doesn’t even include all the riders that you can add to customize coverage.

It’s crucial that you consider all of these differences, as the risk of disability is all too real. The Social Security Administration says that more than a quarter of all twenty-year-olds will experience a disability before they reach retirement age. For anyone who depends on a paycheck – and that’s the vast majority of working-age adults – a disability can be financially devastating.

Disability insurance is your protection against the economic consequences of disability, but the variations in coverage can make a big difference in terms of the benefits you receive – or even whether you receive any benefits at all.

What exactly do you need to consider? There are six key disability insurance policy terms you need to understand.

The Definition of Disability

Disability insurance provides financial protection in case of disability – but what counts as a disability? A minor injury or illness might not qualify, but just how disabled does one have to be to file a claim?

Disability insurance policies take a practical approach to defining disability. If you cannot work, the insurance company will consider you disabled.

However, some policies use an any-occupation definition of disability – if you can’t work in any occupation that’s suitable for you, the insurance company may consider you disabled. This means that, even if you can’t keep your regular job, you might not qualify for benefits if you can switch to a different job. This might not be a big deal for some people, but it can be an issue for highly-specialized workers who have invested time and money in a specific career – for example, doctors.

Own-occupation insurance provides an alternative. Under this definition, if you can’t perform the job you’ve trained for, the insurance company may consider you disabled. Own-occupation policies can be more expensive, but they also offer more robust coverage and may be worthwhile for specialized workers who would take a pay cut if they switched jobs.

But what if you’d rather work because you don’t want to be idle, even if it means earning a lot less? True own-occupation disability insurance lets you work in another position and still receive benefits. Modified own-occupation insurance, on the other hand, does not. Another variation is specialty-specific own-occupation coverage, which can be useful for professionals like doctors with specialties.

The Elimination Period

The elimination period (also called the waiting period) is how long you have to wait before you can file a claim.

You won’t start receiving benefits immediately after you experience a disability because of the elimination period. A shorter elimination period means you’ll start receiving monthly benefits sooner, but coverage will also be more expensive. A longer elimination period means you’ll have to wait longer to receive your first monthly benefit check, but the disability insurance costs may be lower.

The Benefit Period

The Council for Disability Awareness says the average length of a long-term disability is 31.2 months – or 2.6 years. Whereas some disabilities last less than this, others last longer – sometimes much longer – and there’s a chance you may never be ready to return to work.

This is why benefit periods matter. The benefit period is how long you can receive benefits, assuming you still meet the definition of disabled. A short benefit period on a long-term disability insurance policy might be two years. After that, benefits stop. A medium-length benefit period might be five or 10 years. A policy with robust coverage could have a benefit period that only ends once you reach retirement age.

The Benefit Amount

You won’t find disability insurance that replaces 100% of your income, which means experiencing a disability and claiming benefits will involve some kind of a pay cut. How much of a pay cut, however, depends on your policy.

Disability insurance policies typically replace a percentage of your regular income. This could be as little as 50% or as much as around 70%. There may also be a maximum monthly benefit. Additionally, when you buy individual disability insurance with taxed dollars, you won’t typically have to pay taxes on the benefits, which can make a big difference to how far your benefits go.

The Renewal Provisions

Once you buy disability insurance, you’ll probably want to renew the policy year after year. For this reason, you should read the renewal provision carefully.

If you have a guaranteed-renewable policy, it will renew as long as you pay your premiums. However, but the insurance company has the right to raise premiums for an entire class of policyholders, meaning your rates may go up.

If you have a policy that’s non-cancelable, it will renew as long as you pay your premiums and the insurance company cannot raise the rates.

The Optional Riders

Individual insurance policies often come with optional riders you can select to customize your coverage and obtain extra benefits. These riders might provide survivor benefits, student loan payments, retirement account contributions, cost-of-living benefit increases, and coverage increases to match a boost in your income without you needing to receive a medical exam.

Sometimes, you may have a choice of riders at no extra cost, but other riders may increase the cost of the disability insurance policy. For this reason, it’s important to select riders that are most relevant to you.

Reviewing Your Long-Term Disability Insurance Quotes

This is a lot of information, but don’t worry: we’ve got you covered. The Anatomy of a DI Policy infographic explains everything that goes into a disability insurance policy. If you’re an agent, you can give the infographic to your clients before they purchase disability insurance. Get your copy.

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