Individual long-term disability insurance

If you rely on your paycheck to survive, long-term disability insurance can provide peace of mind. If you fall seriously ill or injured, this policy pays out a portion of your income for a specified time frame. While premiums can be costly, you can save by choosing a longer waiting period.

What is long-term disability insurance?

Long-term disability (LTD) insurance pays a percentage of your income if you suffer a covered illness or injury and can’t work. It typically replaces 40% to 60% of your paycheck for 2, 5 or 10 years, or until you reach retirement age.

How does long-term disability insurance work?

There are two key elements of long-term disability insurance: the elimination period and the benefit period.

If you become disabled, the elimination period begins. This is the amount of time you’ll wait before you start receiving benefits. Long-term plans usually come with an elimination period of 30, 60, 90, 180, 360 or 720 days — and 90 days is the most popular choice. If you have short-term disability insurance, that coverage can bridge the gap until your LTD policy kicks in.

How long does it last?

Once the elimination period is over, your insurer pays out benefits up to a specific age, or for a set number of years. This is known as the benefit period, and you’ll need to select one when you apply for a policy.

The standard benefit period options for long-term disability plans are:

Let’s say you select the benefit period “to age 70.” If you become totally disabled, you’ll receive your last check on your 70th birthday — regardless of when you bought the policy.

After the benefit period has passed, you’re no longer eligible to collect benefits.

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Name	Product	Coverage Amount	Benefit period	Waiting period	Own Occupation	Medical exam required
Prudential disability insurance		Short-term: $100–$3,000 Long-term: $300–$6,000	Short-term: 3, 6 or 12 months Long-term: Up to ages 65, 67, or 70, or 2 or 5 years	Short-term: 30, 60 or 90 days Long-term: 90, 180 or 365 days	No	Yes	Go to site More Info	Compare	loading Fetching your data...
MassMutual disability insurance		Not listed	2, 5 or 10 years or up to age 65, 67 or 70	60, 90, 180, 365 or 730 days	Yes	Yes	Go to site More Info	Compare	loading Fetching your data...
Guardian disability insurance		$500 to $20,000	2, 5 and 10 years to age 65, 67 and 70	30, 60, 90, 180, 365 or 720 days	Yes	Yes	Go to site More Info	Compare	loading Fetching your data...
Principal disability insurance		$400 to $20,000	Up to ages 65, 67, or 70, or 2 or 5 years	30, 60, 90, 180 or 365 days	No info available	Yes	Go to site More Info	Compare	loading Fetching your data...
Mutual of Omaha disability insurance		Simplified issue: $300–$4,000 Short-term: $300–$5,000 Long-term: $300– $20,000	Simplified issue: 12, 24 or 36 months Short-term: 3, 6, 12 or 24 months Long-term: 2, 5, or 10 years, or to age 65 or 67	Simplified issue: 30 days (injury) or 90 days (sickness) Short-term: 0 (accident), 7, 14, 30, 60 or 90 days Long-term: 60, 90, 180 or 365 days	No info available	No	Go to site More Info	Compare	loading Fetching your data...

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What qualifies for long-term disability benefits?

Long-term disability caters to long-term health conditions. While every insurer defines disability differently, it typically covers:

• Musculoskeletal and connective tissue disorders — like osteoarthritis, chronic back pain or slipped disks
• Accidental injuries — like brain trauma caused by a car accident
• Cardiovascular disorders — such as heart attacks or serious heart conditions
• Circulatory disorders — like coronary artery disease
• Prolonged mental illnesses — including PTSD and major depressive disorders
• Cancer

How to apply for long-term disability insurance

Around four in 10 companies offer some type of disability insurance as part of their employee benefits, according to LIMRA’s Life Insurance Barometer Study 2019. If yours does, your employer may subsidize your premium.

If you don’t have access to LTD through the workplace, you can purchase an individual policy on your own. By going down this path, you’ll be able to customize your coverage and choose the best benefit and elimination period for your needs.

How to evaluate your group long-term disability policy

If you’re offered a group policy through your work, look for these terms to fully understand your coverage:

• Elimination period. This is how long you have to wait after you become disabled before your monthly benefits kick in, and 90 to 180 days is the most common timeframe for LTD. Most group policies will give you the option to choose your own elimination period.
• Benefit period. When you’re disabled, you’ll receive benefits for a specified amount of time — and this is the benefit period. The benefit period through a group disability plan is usually pre-determined — the longer it is, the better.
• Benefit amount. This refers to the monetary value of your policy. It’s a percentage of your income, and ideally, it will be on the higher end of the spectrum — around 60%.
• Definition of disability. Your policy will classify a disability in one of two ways. Own-occupation policies provide coverage if you can’t perform your usual job, even if you’re able to work in a different job, while any-occupation policies only cover you if you’re unable to do any job due to your disability.

Is long-term disability insurance taxable?

While your salary is taxed, your disability insurance benefits aren’t — so your checks could come close to your take-home pay.

Unfortunately, your premiums aren’t tax-deductible.

Long-term vs. short-term disability

Both types of coverage protect your income, but they differ in terms of how long they last and the percentage of your paycheck they replace.

These are the key features of long- and short-term disability insurance.

Is long-term disability insurance worth it?

While health insurance can cover many illnesses and injuries, the coverage is far from exhaustive. That’s where disability insurance comes in. If you become disabled and can’t work, your policy will replace a percentage of your paycheck and help you to pay for your living and medical expenses.

If you’re still working and don’t have substantial savings, consider long-term disability insurance. While it’s more expensive than short-term disability, it covers a longer list of illnesses and injuries, including arthritis, back pain, heart disease and mental health conditions.

It lasts longer, too. Your benefit period can span several years, or until you reach retirement age and Social Security kicks in. To put this into context, the average long-term disability claim lasts just under three years, according to the Center for Disability Awareness. But if you’re seriously ill or injured, LTD can potentially cover you for the rest of your working life.

Who has the greatest need for long-term disability insurance?

As the truest form of income protection, LTD makes the most sense for these groups of people:

• Breadwinners supporting a non-working spouse, children or other financial dependents
• Working parents who cover part of their family’s living expenses
• Manual laborers who may work in dangerous settings with injury-prone tasks
• Specialists who may still be on the hook for expensive loans should they suffer a disability, like surgeons

Additionally, if you’re an employee with access to group disability coverage, it’s worth taking advantage of that benefit. Your premiums will typically be subsidized or completely paid for by your employer, making this a low-cost way to protect your paycheck.

Bottom line

Long-term disability insurance replaces part of your take-home pay if you become ill or injured and can’t work. It covers a comprehensive list of physical and mental conditions, including common and chronic issues like back pain. But while it can last years or even a lifetime, the maximum monthly benefit is usually between 40% and 60% of your salary.

Explore your options by comparing disability insurance companies.

Frequently asked questions

• Will my life insurance policy cover disability?

  No. Most life insurance policies don’t have built-in clauses for disability, meaning they won’t pay out if you become disabled. However, some insurance companies allow you to add certain riders to your policy that will step in if you become seriously ill or injured and can’t work.

• How often are long-term disability benefits paid out?

  Generally, you’ll receive a check each month during the benefit period.

• What happens if I'm disabled but can still work?

  It will come down to your insurer’s definition of disability. There are two types of plans:

  • Own-occupation disability insurance pays benefits if you can’t work in your usual occupation, but you can still work a different job.
  • Any-occupation disability insurance pays out if you can’t do any job. It’s trickier to claim benefits for this type of policy, because you’ll have to prove you physically or mentally cannot perform any kind of work.

  Before committing to coverage, ask your insurer which definition applies to its disability policies.