What is Long-Term Disability Insurance?

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Most of us don’t think about it, but one of the things we rely on most is our ability to go to work and make a living. If our income is interrupted for even a few days, it can be stressful. Unfortunately, serious injury or disability can disrupt your ability to earn money and pay your bills for months or years. Do you have a solution or plan in place to help in case this ever happens to you?

Group Insurance

You may have long-term disability insurance through work, and if you do, this means you’re likely paying into a group plan to stay covered. Most long-term disability insurance covers a part of your basic salary. This insurance usually covers 40 to 60% of your base salary and may have a monthly cap such as $9,000.

This means that if you are ever seriously injured, you will get between 40% to 60% of your base salary as long as it is under $9,000. You will want to read the policy of your long-term disability coverage to understand the specifics of your insurance.

Individual Coverage

If you don’t have long-term disability insurance through work, you may need to buy individual insurance. If you’re in the market for this type of coverage, you will want to compare the long-term disability insurance average cost across different markets and from different insurance providers.

You may also want to use a long-term disability insurance cost calculator to help you evaluate how much this type of coverage will cost.

Insurance Terms

Cost isn’t the only thing you need to consider. Long-term disability insurance rules vary widely by policy. Many have waiting periods of 90 days or more because they are designed to kick in after short-term disability insurance. If you don’t have short-term disability insurance, this means you need to have a plan for dealing with the first portion of costs from your serious injury.

You also need to read the rules carefully to understand when your coverage ends. If you stay disabled, will the coverage last until retirement age or for a specific number of years? If it’s for a specific number of years, you need to have a plan for dealing with permanent injuries. You also need to look at additional services your coverage offers. Some plans allow you to take advantage of physical rehabilitation or even training so you can get back into the job marketplace, even with a disability.

Long-term disability insurance is an important precaution if you rely on income. It ensures that even if you cannot make money to pay your bills, you will have a source of income to pay for living expenses, food, medical supplies and other costs. Even if you are disabled and can’t work, your bills still need to be paid.

To help you choose the right insurance coverage, Money Help Center provides calculators to evaluate the costs of different plans. Our calculators are free to use, and since we are a third-party provider, our calculators are unbiased.