Not All Jobs Occupations Are Treated Equally
Disability insurance is designed to protect your income, so it should come as no surprise that your career will have a major impact on your premium rate. Insurance companies classify jobs based on the hazards of the work, as some are more prone to injury or illness than others.
Your occupation will also be assessed based on the difficulty of returning to work following an injury or illness. The more difficult it is to perform a job with certain injuries or illnesses, the more the insurance company will likely have to pay in benefits.
Job occupations are grouped into specific risk classes, which are numbered on a scale of 1 to 5 or 6. Typically, the higher the number, the less risk an insurer considers that profession. The lower the risk, the lower the premium rate.
When you compare policies, you should note that insurers assign different risk classes to the same profession. One insurer may designate a job as a 4, while another may classify it as a 5.
Long Term Disability Highlights
Proactive Response to Behavioral Health: A clinical resource contacts the employee and provides maximum customized support to help avoid delayed recovery.
Motivational Interviewing: Clinical staff receive training in techniques that can help employees make positive changes.
Return-to-Work Incentive: Disabled employees who return to work may qualify for partial or full benefits even while working for a period of time.
Return-to-Work Rehab: This feature covers some or all expenses paid by employees for approved costs that support a return to work.
Your Policy Choices Matter Too
So far, weâve highlighted personal factors that influence the cost of long term disability insurance. However, there are also various policy choices that will influence how much you pay in monthly premiums.
The benefit period you select is a prime example. The longer your benefit period is, the more you can expect to pay in premium. More often than not, the most cost-effective benefit period length is 5 years.
Your elimination period, or waiting period, is another example of a policy choice that impacts long term disability insurance cost. The elimination period for disability insurance is similar to the deductible on property insurance. Itâs the part you pay out-of-pocket before benefits kick in. Cost runs the opposite of your benefit period: The longer your waiting period is, the less you will pay in premium.
Elimination periods for long term disability can be as little as 30 days or as long as a year. The standard length is 60 or 90 days.
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Best For Small Business Owners Or Self
Many optional coverages for business owners
Unimpressive financial strength rating
Long-term disability coverage is even more important if youre a business owner. After all, your business might not withstand the loss of you at the helm for several monthsor even years. Having a long-term disability policy in place ensures youll receive income even in times when your business or freelance work isnt earning you money.
We chose Assurity as best for small business owners and self-employed individuals due to the high coverage limits and depth of options. Disability insurance from Assurity is also available through Breeze, a top-rated insurtech firm that also makes our list. However, coverage options may be limited via Breeze if you are self-employed. Plus, by going directly through Assurity, you can bundle other business insurance coverage with your long-term disability policy.
Assurity offers benefit periods of one, two, five, or 10 years, and you can renew your policy up until age 67. Coverage amounts range from $500 to $20,000 per month, making it perfect for high-earning business owners and solo-preneurs. Your Assurity policy for business owners, or business overhead expense coverage, will even pay for your lease, payroll, and company-related expenses if you are unable to work. These factors put it at the top of our list as the best long-term disability insurance for business owners or self-employed individuals.
Do You Have To Pay Back Long Term Disability Insurance Benefits
Typically, you will not have to pay private long term disability insurance benefits back. These benefits are treated as tax-free income that you have earned by paying premiums. However, there are rare exceptions where you may need to pay a portion back.
SSDI benefits are difficult to get approved. If you are approved, it could still be months, even years, before you begin receiving benefits. That’s why SSDI benefits begin with something called a catch-up payment. It’s a lump-sum that makes up for the time it took the Social Security Administration to review your application.
Meanwhile, long term disability is more straightforward. Approval is quicker and benefits start paying as soon as your elimination period ends, likely before your application for SSDI benefits has been processed. If so, your policy’s offset provision will require that you pay the SSDI catch-up payment you received back to your private insurer. That way, your SSDI benefits are being accurately deducted from the private benefits you receive.
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Do I Need Long Term Disability Insurance
If you earn an income, you should strongly consider purchasing a long term disability insurance plan. This is especially true under the following circumstances:
- You have dependents who rely on you financially, such as a spouse, kids, or aging parents.
- You have debt that you need to pay off, such as student loans or a mortgage.
- You have a high-paying job occupation that is not easily replaceable .
- You are self-employed .
- You have a technical job occupation that requires skills that couldn’t be performed if disabled.
Other types of coverage exist to help people through periods of disability, such as short term disability insurance, workers’ compensation insurance, and Social Security Disability Insurance . However, only long term disability insurance will cover the following circumstances:
- Disabilities that occur outside of work
- Disabilities that last longer than a few months.
- Disabilities that are serious enough to prevent you from working your regular job, but still allow you to work in other capacities
- Individuals who earn well above what SSDI pays in monthly benefits
It’s pretty clear why long term disability insurance is such a valuable component of your financial safety net. But is the cost actually worth it?
Common Maximum Benefit Periods For Ltd Policies
Although Maximum Benefit Periods can vary, there are some common ones. Many policies provide long-term disability benefits until age 65. Other policies offer benefits until your Social Security Normal Retirement Age . Your SSNRA depends on the year you were born. Alternatively, some policies will specify the number of months for which benefits are payable according to your age at the time you become disabled. Finally, although it is rare, some policies even provide lifetime benefits.
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Long Term Disability Insurance
Available through the workplace, this coverage helps maintain your standard of living if you’re unable to earn a paycheck due to an accident or illness
Covers essential living expenses: can help pay for food, clothing, utilities, your mortgage, car payments and more
Direct monthly payments: receive a portion of your salary paid directly to you each month if youre unable to work
Rehab incentives: coverage may include financial incentives designed to help you transition back to work
Easy claims filing: report claims online or by phone
Competitive rates: this group coverage is offered only through your employer
For complete plan details, talk to your companys benefits administrator.
How Long Does Long
Even after coverage is approved, your long-term disability insurance benefits wont kick in until youve satisfied the waiting period requirement. For most policies, this is at least 30 days, though it can easily be 60, 120, 365, or even 720 days.
Once benefits start, they will continue until your predetermined benefits limit is reached. This is the period of time you chose when you purchased the policy, and can last for a specific number of years or through retirement. The longer the benefits period, the more youll pay in premiums for your coverage.
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How To File A Disability Claim
1Programs are provided through third party vendors who are solely responsible for their products and services. Full terms, conditions and exclusions are contained in the applicable client program description, and are subject to change. Program availability may vary by plan type and location, and are not available where prohibited by law.
2These programs are NOT insurance and do not provide reimbursement for financial losses. Some restrictions may apply. Employee assistance services are provided by or through operating subsidiaries of Cigna Corporation, including Evernorth Behavioral Health, Inc. and Evernorth Care Solutions, Inc. Customers are required to pay the entire discounted charge for any discounted products or services available through these programs. Programs are not available under policies issued by New York Life Group Insurance Company of NY.
3My Secure Advantage is NOT insurance and does not provide reimbursement for financial losses. Program is provided through a third-party vendor who is solely responsible for their products and services. Program is not available under policies issued by New York Life Group Insurance Company of NY.
New York Life Group Benefit Solutions products and services are provided by Life Insurance Company of North America and New York Life Group Insurance Company of NY, subsidiaries of New York Life Insurance Company.
This material and page are not intended for use with residents of New Mexico.
Ensuring Employers Have The Right Expertise
Our Workplace Possibilities consultants provide employers with access to local, onsite support.3 Consultants work with employees proactively and coach managers on how to spot employees needing support and refer them to our program.
They can help ease the burden on HR by working directly with employees, coordinating available benefits. Consultants also help employers with Americans with Disabilities Act Amendments Act accommodations.4
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How To Apply For Long Term Disability Insurance
All long term disability insurance plans are backed by an insurance company in some way or another. However, there are various ways you can go about doing so.
For example, one common way is to sign up for group coverage. This is most commonly done through an employer. You may also find group coverage through:
- Industry associations
- Membership organizations
Many employers offer group disability insurance coverage to their employees as a workplace benefit. In fact, employers often pay some or even all of the premium cost.
Another option is to buy your own personal policy. You can do this through an insurance agent or directly from a reputable insurance company that offers individual long term coverage.
How We Chose The Best Long
In creating this list, we looked at and compared more than 25 different disability insurers offering long-term coverage. In order to choose the best for each of these long-term coverage categories, we considered a variety of factors including the ease of obtaining a quote and buying a policy, coverage availability, price, financial strength ratings, and policy options.
We also looked at customization options and features available, which allow customers to really create the policy that best suits their and their familys needs.
Social Security Administration. “Disability Benefits,” Page 1 of PDF.
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Best Disability Insurance Companies Of 2022
- Best Short-Term Disability Insurance: Mutual of Omaha
- Best Long-Term Disability Insurance: Guardian
- Best For Risky Occupation Fields: Assurity
Why We Chose It: We chose Northwestern Mutual for our overall disability insurance pick because they are the largest seller in the United States, and S& P Global Market Intelligence ranked them as number one.
Achieved maximum score on the Disability Equality Index
Received high ranking in the J.D. Power customer satisfaction survey
Slightly higher average premiums for females
Cant buy or get a quote online
Must use a local agent who earns a commission
Northwestern Mutual holds an A++ rating from AM Best and has been around since 1857, making it a sound choice for our number-one long-term disability insurance. They also hold the highest rating of A+ from the Better Business Bureau .
The company also received a perfect score on the Disability Equality Index administered by the American Association of People with Disabilities. Although the report assesses company performance for disability inclusion policies and practices, rather than for their insurance offerings, it highlights Northwestern Mutuals commitment to and understanding of disabilities.
Northwestern Mutual offers higher premium options with more generous benefits. They have four alternative definitions of total disability and have partial disability coverage options if someone can only work part-time.
The Best Disability Insurance Companies By Profession
Roughly 90% of all disability claims are due to conditions we cannot control illnesses rather than injury, according to Policygenius Sales Operations Manager Anthony He.
That’s why it’s still important for people who don’t have high-risk jobs to have disability insurance. In fact, it’s especially important for people in high-paying jobs that may need to pay back expensive loans for their education.
Most disability insurance companies heavily weigh your profession when determining your premiums and may be more accommodating to workers in certain fields. For example, insurance companies like Assurity, Illinois Mutual, and Mutual of Omaha can provide better coverage for people whose work includes manual duties whether theyre nurses or postal workers. Principal is best for high-income earners.
Here are the best disability insurance companies for:
The cost of disability insurance policies depends on these factors:
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Your Employment And Returning To Work
When you are ready to return to work, please contact your claims specialist, who will work with you on your return-to-work plan.
Most plans include a recurrent disability provision. If an employee becomes disabled again due to the same condition within a specified number of days, the recurrent disability provision allows continued disability payments under the original claim.
The number of days for the recurrent disability provision is stated in the policy.
If an employee becomes disabled after the number of days in the recurrent disability provision, or due to a new medical condition, a new claim would need to be filed.
Depending on the definition of disability as defined in the policy, an employee may be able to receive benefits and work part time.
Many policies will allow employees to work part time while on claim. Typically, an employee will need to have a certain percentage of their earnings lost due to disability for a claim to remain active.
Please review the definition of disability, outlined in the certificate of coverage.
1. Unum internal data, 2016. Note: Causes are listed in ranked order.
Group Long Term Disability:
What Is Long Term Disability Insurance
Disability insurance is sometimes referred to as income replacement because it pays you benefits to replace a portion of the income you lose if youre unable to work due to a prolonged illness or injury. Youll continue to receive benefits until youre able to return to work or until you reach the end of your benefit period.
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Whats The Difference Between Short
There are two main types of disability insurance coverage: short-term disability and long-term disability. All of the companies on this list offer long-term disability coverage and some offer short-term disability insurance.
The biggest difference between these two types of disability insurance is right there in the name. Short-term policies last for months, while long-term policies last for years or decades.
The typical maximum duration for short-term disability insurance is six months. That is, you receive benefit payments for no more than six months after filing a claim.
Long-term disability insurance policies last at least two years. Those with finite terms can last five or 10 years. Those with indefinite terms typically pay benefits until you reach retirement age. The longer your long-term disability policys term, the higher its premium.
Whats The Difference Between Total And Partial Long Term Disability Insurance
Total long term disability insurance pays you benefits if an illness or injury leaves you unable to work in any capacity, and can pay you benefits up to the time you reach retirement age, depending on the details of your policy. Partial long term disability insurance pays you benefits even if you are able to work, but not at your full capacity, limiting your earnings.
What Doesn’t Long Term Disability Insurance Cover
Long term disability insurance covers a lot, but it canât cover everything. There are almost always coverage exclusions and limitations.
To avoid any confusion or surprises, exclusions and limitations will be listed in your policy contract. The purpose of coverage exclusions is to mitigate the insurance carrier’s risk of paying a claim resulting from high-risk conditions or activities.
Some common examples of exclusions that apply to all applicants include:
- Self-inflicted acts
- Civil disobedience or rebellion
- Operating a motor vehicle while intoxicated
Depending on your medical underwriting and lifestyle choices, you may also receive individual exclusions. For example, if you have had a herniated disc, your policy may exclude claims resulting from spinal injuries. Many policies also limit benefits if a mental illness or nervous disorder limits your ability to work.
Since they are sometimes confused, it’s important to highlight the difference between long term disability and long term care insurance. A long term care policy will cover the costs of nursing homes, assisted living facilities, or in-home care if you become unable to care for yourself. However, it will not replace lost income like a long term disability policy.
When Does Long Term Disability Insurance Kick In
Long term disability coverage starts after you are approved by the insurance company, you accept the offer for coverage that is made, and you begin paying your premiums.
When long term disability benefits start isnât as straightforward though.
Your policyâs elimination period will determine when long term disability benefits kick in if you become disabled. This is also known as the waiting period because it states the period of time you must wait after your disabling event before you begin receiving benefits.
When applying for long term disability coverage, your waiting period options typically include 30, 60, 90, 180, or 365 days.
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