Disability insurance can help you pay the bills if you suffer a disability that leaves you unable to work. But how much will you actually get? The exact amount will depend on what type of policy you have and how much coverage you can afford.
What's in this guide?
- How much money will I get from disability insurance?
- How much will I need in disability payments?
- What do I do if my disability payments aren’t enough?
- Compare disability insurance
- I just suffered a disability. How do I get payments?
- How long will it take to receive a payment?
- When will I stop receiving disability payments?
- Bottom line
- Frequently asked questions
How much money will I get from disability insurance?
Disability insurance is based on a percentage of your predisability income. The exact percentage of your income depends on the type of disability insurance you buy, short or long term, and which percentage of reimbursement you choose when buying the policy.
- Short-term disability insurance. Typically pays 60% to 80% of your income.
- Long-term disability insurance. Usually pays 40% to 60% of your income.
If you suffer a disability, your insurer will look at your immediate income prior to the disability and use those numbers to determine your predisability income, then pay out a percentage of that amount. If you have a fluctuating income, your insurer will likely take your average income over a set period of time, such as the six to 12 months prior to your disability.
How much will I need in disability payments?
Since disability benefits are usually based on your pre-tax salary, your disability benefit amount will be closer to your take-home income than the percentage might appear. But two main factors will determine the exact amount that you need:
- Your financial needs. You’ll likely want your disability benefit amount to be high enough to cover your most important expenses, which may include your mortgage or rent, loan payments, utility bills and grocery expenses.
- Your budget. If the monthly benefit amount that you’d like is too expensive, you can increase your elimination or waiting period before you receive your benefits and decrease the amount of time that you’ll receive benefits.
What do I do if my disability payments aren’t enough?
If you’ve calculated your disability benefits and you don’t think they’re high enough, there’s a few steps you can take now to make sure you have enough money if you experience a disability.
- Supplemental disability insurance. If you have disability insurance through your workplace, then you can buy supplemental disability insurance. This type of disability policy will cover the remaining income gap between what you earn now and what your disability policy will pay, allowing you to take home more of your predisability income.
- Adjust your policy. If you’re not maximizing the income percentage on your policy, you could increase it. To help offset the higher premium, consider also increasing your elimination period or decreasing your benefit payout period.
- Prioritize expenses. While it may be difficult to get rid of certain expenses, like your new car or phone, coming up with a financial plan that allows you to pay for the most necessary things, such as rent, mortgage and groceries, can help you weather your disability.
- Look at your return to work criteria. If your disability isn’t too severe, you may be able to find some type of employment and still collect disability. You’ll need to find out what your disability policy says about returning to work, but some policies allow you to go back to work while still receiving disability benefits.
Compare disability insurance
I just suffered a disability. How do I get payments?
If you recently experienced a disability, your first step is to file a claim with your disability insurer. The insurance company will investigate your claim to make sure that you’re eligible to receive benefits. Eligibility will mainly depend on whether your disability is covered under your policy.
If your disability is covered and you’re eligible to receive benefits, you’ll then have to wait for however long your elimination period is. The elimination — or waiting — period starts from the day that you become ill or injured.
How long will it take to receive a payment?
Once you experience a disability and file a disability claim, you’ll have to wait before you collect payments for however long your waiting or elimination period is. The elimination period is basically a time deductible — the longer you wait before you collect a benefit, the cheaper your policy will be. Your elimination period will depend on the type of policy you have.
- Short-term disability. You can usually opt to wait between one and 90 days before receiving your short-term disability benefit.
- Long-term disability. Long-term options vary, but typically it could be anywhere from 30 days to two years before you receive payments.
When will I stop receiving disability payments?
You’ll choose how long you’d like to receive disability payments when you first buy your policy. The less time that you receive benefits means the cheaper the policy will be. Your benefit period options depend on the type of disability policy you have.
- Short-term disability. The standard options for short-term disability are one, two, three, six or 12 months. Some policies may allow you to go as high as 18 or 24 months.
- Long-term disability. Long term disability benefit periods are usually two, five, or 10 years, or up until retirement age or age 65.
You’ll typically receive between 40% and 80% of your predisability income with disability insurance, though the exact amount will depend on whether you buy short-term or long-term disability. You can also adjust your elimination period and your benefit period, which can help offset the increased cost of a higher percentage policy.
Before making a final decision on which disability insurer you choose, compare disability insurance companies to find the best policy for your budget and needs.
Frequently asked questions
More guides on Finder
Mortgage brokers versus banks
Check out our guide on the differences between mortgage brokers and bank loan officers. See which one will suit your needs.
Different types of mortgage loans
A 101 guide covering the types of mortgage loans every homebuyer should know.
Guardian vision insurance review Apr 2021
Get a generous allowance to put towards contact lenses or frames with this plan.
Millions of Americans are eligible for healthcare savings under the American Rescue Plan
The bill opens up cheaper health insurance for low- and middle-income families as well as laid-off workers.
How to move to Canada
Explore the options and programs that Canada has in place to help you move to Canada.
Work for yourself? You might qualify for a larger PPP loan
You can now calculate your payroll expenses based on gross income instead of net profit. Here’s how it works.
Guardian dental insurance review 2021
This insurer has four dental plans to choose from — compare costs and features now.
What is health insurance cost sharing?
Learn cost-sharing terms to find out how much you’ll really pay for healthcare.
Compare life insurance for major organ transplant
Learn your policy options based on the type of transplant and your health status now.
How much is Medicare in 2021?
Compare premiums, deductibles and coinsurance for every Medicare plan in 2021.
Ask an Expert