Are You Choosing the Right Disability Policy for Your Needs?

Andrew Stewart |

According to the Council for Disability Awareness, nearly 70 percent of American workers in the public sector have no private insurance coverage for long-term disability. That’s in spite of the fact that 25 percent of working adults will suffer a long-term disability at some point in their lives.1

Long-term disability is an extended inability to work due to a physical condition. Disability can be caused by a broad range of medical issues like accidents, chronic pain and injuries, serious illnesses, and much more. If you suffer a disability and are unable to work, you could face steep medical bills along with the burden of funding your expenses while not receiving a paycheck.

You can minimize the financial risk of disability by using long-term disability insurance, which pays you a monthly benefit should you ever become physically unable to work. You can use the monthly benefit to pay bills and replace your lost income. The amount of the monthly benefit is often calculated as a percentage of your salary.

Cost is one of the reasons why any people resist disability insurance. While some policies may be costly, it’s also possible to find a policy that fits your budget. Many policies have various features that can be changed to alter the premium and coverage. You can choose the combination of features that provides the right level of protection within your budget.

Below are a few questions to ask as you shop for disability insurance. All of these questions involve features that impact the policy’s premium. If you can’t answer these questions, you may want to do more research before you commit to a policy.


How long is the waiting period?

As the name suggests, long-term disability insurance is designed to cover ailments that are expected to last for an extended period of time. That means long-term disability insurance policies usually don’t cover ailments that last only a few weeks or months.

Many long-term disability policies have something called an elimination period, also known as a waiting period, to make sure the policy isn’t used to cover a short-term disability. The elimination period is a designated amount of time you must wait after you suffer a disability before your insurance benefits begin. Elimination periods often last anywhere from 30 days up to six months or even a year.

When you buy your policy, you may have the option to choose from several different elimination period durations. Generally, a shorter elimination period leads to higher premiums. However, a longer elimination period means that you may have to self-fund your expenses for several months before your benefits begin.

It’s important to know what your elimination period is, because you will likely need to have other forms of protection in place to cover you during this time should you become disabled. For example, if you suffer a disability and have a three-month elimination period on your insurance policy, you may need to rely on personal savings or even a short-term disability policy to cover the gap.


What is the maximum period of time benefits will be paid?

Just as you may be able to choose your elimination period, you also may be able to choose how long your policy will pay benefits. For example, you might choose to receive benefits for a maximum of three, five or even 10 years. You could even select a benefit time frame that lasts to age 65, which would help you bridge the financial gap to retirement.

Everything else being equal, a longer benefit payment period will usually result in higher premiums. If you’re relatively young, however, you may want protection that lasts for many years. If you are approaching retirement, a shorter time frame may be more suitable.


Does the policy cover your own occupation or any occupation?

Some long-term disability insurance policies make a distinction between what qualifies as a disability and what does not. One of the ways this determination is made is by reviewing whether you are capable of working in any capacity.

Some policies will pay benefits only if you are physically unable to work in any occupation. In many instances, this requires you to be nearly totally disabled to receive benefits.

Other policies will pay benefits if you can work other occupations but are not able to work in your own occupation. Generally, an “own occupation” policy costs more than an “any occupation” policy. If you work in a highly skilled profession, however, you may want to consider a policy with an “own occupation” designation.

Ready to protect yourself against the risk of disability? Let’s talk about it. Contact us today at AMS Resources Network. We can help you analyze your needs and develop a protection strategy. Let’s connect soon and start the conversation.



Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

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