Long-Term Disability Insurance

There are several types of insurance, with some being basic insurance which is advisable for everyone. One such type of insurance is long-term disability insurance. However, not many people know how effective it is and why they should get it. 

Long-Term Disability Insurance


However, this post gives you an overview of long-term disability insurance. You’ll learn about what it entails, how it works, and its pros and cons. You don’t want to miss this information so ensure you read to the end. 

What is Long-term Disability Insurance? 

Long-term disability insurance is a type of income protection. The goal is to cover catastrophic accidents and illnesses that keep you from working for three months.


It is a policy that substitutes workers’ income if they cannot work due to illness or accident. Hence, it allows them to continue paying bills and meeting financial goals and responsibilities. This includes permanent disabilities that make it impossible for you to return to work.

Long-term disability insurance is an excellent investment for healthy, working people who want to secure their financial future. You can obtain coverage on your own, as part of a group, or both.

How Does Long-term Disability Insurance Work?

Long-term disability insurance typically costs 1% to 3% of your annual wage. After an elimination period, if you become disabled and meet the policy’s definition of disability, you’ll be eligible for benefits. 

Benefits usually are around 60% of your gross salary. Depending on your policy terms, it can last anywhere from two years until retirement age.


Long-term disability insurance functions, for the most part, similarly to other types of insurance.

You are responsible as the policyholder for making periodic premium payments, which you usually make monthly. In exchange, your insurer guarantees to pay you long-term disability benefits if you suffer a catastrophic illness or disease. As earlier said, such an illness must prevent you from working for an extended period.

Types of Long-term Disability Insurance

There are two types of such disability insurance:

Disability insurance for your occupation

A disability is the inability to work in your ordinary occupation. If you have your occupation insurance, you may be able to collect benefits even if you can work. Also, there are several types of self-employment disability insurance available.

Disability insurance for any occupation

The incapacity to work in any occupation is a handicap. These plans are more difficult to receive benefits from. This is because you’d have to prove you couldn’t work, which is problematic.

However, they can be less expensive.

Differences between Long-term Disability Insurance and other types of Disability Insurance

Long-term disability insurance and short-term disability insurance

Many firms offer short-term disability insurance, which can last anywhere from three to six months to a year. However, this type of insurance covers the months, years, and even decades after exhausting the disability award.

Long-term disability insurance and disability insurance from the government

California, Hawaii, New Jersey, New York, and Rhode Island are the only states with state-funded short-term disability programs. In California, you may be eligible for payments for up to 6 months or even a year. 

However, it is only if you live in a state that offers short-term disability insurance. After exhausting your state-provided benefits, long-term disability insurance covers you for months, years, or even decades.

Long-term disability insurance and Social Security disability insurance 

Social Security disability is technically an option for long-term disability payments. Still, you should be aware that the application procedure can take up to a year. Also, it denies 61% of people on their first application. 

It’s also worth mentioning that the average monthly benefit is just over $1,000. If it isn’t enough to live on, you’ll need to make another decision.

Long-term disability insurance and group disability insurance

Some employers offer long-term disability insurance, but the benefits may be inadequate. Furthermore, the definition of disability may be more challenging than in a personal plan. 

Then there’s the most significant disadvantage of employer-sponsored insurance. It’s not portable, which means you’ll lose coverage if you leave your work.

Benefits of Long Term Disability Insurance

Benefits begin on the first day after six (6) months of total disability, depending on the organization. It pays its benefits as long as the recipient is disabled or until the age of 65, whichever comes first.

It comprises an income distribution that relies on a proportion of your monthly earnings. This excludes overtime pay, bonuses, and other types of extra compensation. 

How to Submit an Application for Long-Term Disability Insurance

This insurance is straightforward and well worth the investment in the long run.

Contrast and compare quotes

If you only seek quotations from one company, you could overpay by hundreds of dollars per year. Using a comparison tool, compare disability insurance quotes from various insurance companies. 

Complete and submit an application

Your disability insurance application will require basic information as well as income documentation. Your document can be either your most recent tax return or an employment offer letter. You’ll also have to sign paperwork giving the insurance permission to see your medical records.

Conduct a telephone interview with the candidate

An insurance company representative will contact you to learn more about your lifestyle (hobbies, travel) and medical history. It will take you about 20 to 25 minutes to complete.

Pass the medical exam and move on to the underwriting and approval stages

A technician will come to your home or place of business to take your height, weight, pulse, and blood pressure. Also, they’ll take blood and urine samples and ask you questions about your health. 

The insurance company looks at your results and figures out how much it will cost to insure you. It takes two to four weeks to perform this operation.

Sign the bill and pay it

After they authorize your insurance and establish your rates, you will get your policy. To activate the insurance, sign it and pay the first premium. 

Afterward, you can now rest assured. If you become incapacitated and unable to work, you will still have a source of income.


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