Long-Term Disability Insurance
How long your disability insurance benefits last depends on the details of your policy. Unlike short-term disability coverage, long-term disability policies are designed to replace your income from two years all the way to retirement, or until you can return to work.
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Long term disability plans have several moving parts, all of which have an impact on your benefit payments, The most important parts of your policy are:
- Your benefit period
- Your waiting period
- The definition of disability in your policy contract.
Choose a Benefit Period that’s Right for You
Your long-term disability insurance benefits will last as long as your policy’s benefit period. Once you have completed your elimination period (waiting period) and started to receive benefits, your income will be protected. This way, you will have money coming in even when you cannot work.
Disability insurance policies typically provide benefits for a set period of time, such as two, five, or 10 years. However, some policies may pay out until retirement. The length of the benefit period depends on the individual policy and the needs of the policyholder.
Insuring yourself against the possibility of a long-term disability doesn’t have to be exorbitantly expensive. In fact, for most people, the cost of long-term disability insurance is relatively low. This is especially true when you consider the peace of mind that comes with knowing you’re covered financially in the event of an unexpected disability.
A long-term disability insurance policy that provides coverage until retirement age can be extremely beneficial for those who work in certain professions that require a specific set of skills.
For example, doctors, dentists, and nurses need fine motor skills for many procedures. A policy that lasts until retirement age can protect their future income in the event that a disability prevents them from being able to use those skills.
What about the Elimination Period?
There is no one-size-fits-all when it comes to disability insurance – it all depends on your individual needs. But regardless of what type of policy you have, it’s important to know that benefits will never start automatically. You always have to file a disability claim and then exhaust the elimination period before benefits begin.
Unlike short-term disability policies, long-term disability plans have a wide range of elimination periods to choose from. Although a waiting period of three to six months is typical for most applicants, many individuals choose up to a year in order to reduce their monthly premiums.
But, be forewarned, unless you can afford to live off your savings or other assets for a substantial time period, a one-year elimination period could leave you financially devastated.
If there’s room in your budget, consider having a short-term disability plan that will cover you for at least as long as your LTD plan’s elimination period. That way, you won’t have an income interruption when your short-term benefits run out and your long-term benefits begin.
However, for individuals who are sole proprietors or self-employed professionals, short-term disability insurance can be expensive so many in this group will simply go without it.
Choose your Definition of Disability Wisely
Choosing your definition of disability can have a tremendous impact on how benefits will be paid under your policy and as such, it’s imperative that your insurance professional explain the differences to you.
Own Occupation versus Any Occupation
In order to qualify for long-term disability benefits, most insurance policies require that you be unable to work in your normal (own) occupation. To evaluate your claim, the insurance company will first need to determine what your job is and how it is performed, in order to assess your ability to do it.
There are many occupations that require a high level of physical fitness. Even mild physical impairments can prevent someone from being able to perform the required duties. However, insurance companies often make the mistake of thinking that an occupation is less physically demanding than it actually is, and as a result, they may deem the person capable of performing his or her duties.
On the other hand, you may have worked in an office environment before, performing complex tasks. However, mild cognitive impairments can make it difficult to continue doing these types of tasks.
The insurance company may only consider the physical demands of your occupation and not the cognitive demands, concluding that you are capable of sedentary work just because you are physically able to do it.
Therefore, you should make certain that your long-term disability insurer is properly defining all aspects of your occupation in order to avoid a mistaken denial of benefits. For example, a thoracic surgeon is generally a high-income earner because of his or her unique skillset and as such, should not lose benefits because the surgeon is capable of teaching surgery rather than practicing surgery.
Under the Any Occupation definition of disability, the insurance company will assess your ability to do a job based on your education, training, or experience. For example, even though you may be a doctor, you might not be able to continue practicing medicine, but could potentially teach instead. This is due to the fact that any skills you have can be transferred to another job.
Moreover, even though you may be qualified for a certain job, the insurance company is not required to show that you are actually able to get that job. They only need to demonstrate that there are usually jobs available in your geographic area that you would be eligible for. Stay away from “any-occupation” disability policies.
Which Companies offer the Best Long-Term Disability Insurance?
Although there are many LTD companies in the marketplace, as with any industry, some companies perform better than others. As disability insurance specialists, the team at LifeInsure.com has become familiar with the good companies and the great companies.
Over the years, our team has determined which insurance companies are competitive, customer service focused, and pay claims according to the insurance policy that was ordered by the agent and the policyholder.
We’ll be happy to share this information with you and devise a long-term disability coverage solution that is right for you and your circumstances.
Contact us at your convenience at 866-868-0099.
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