Long Term Disability and Short Term Disability

unnamed(This section refers to INDIVIDUAL disability policies. For information on Group Disability policy, visit our Employee Benefits section)

Disability insurance protects your paycheck in the event a sickness or injury prevents you from performing your job. Disability insurance is the most important insurance coverage you can purchase because everything you do in life depends on your ability to earn an income. Your income pays for your car, home , food, vacations, etc. Therefore it is extremely important that you protect your income with a personal disability policy.

Short Term Disability is a policy which provides coverage for a short period of time – usually starting from 1 day after you’re injured until 90 days after your injury. It typically covers at least 50% of your income on a tax free basis.
Long Term Disability provides coverage from 90 days after you are injured or sick and can last until age 70 if you are permanently disabled.( Benefit period depends on policy purchased)

Time Period and Amount

The typical LTD policy will cover up to 60% of your salary on a tax free basis if you pay the premium with after tax dollars. (There are restrictions – read the attached article about disability insurance in the right column on this page. )

You can purchase a long term disability policy for a benefit period of 2 years, 5 years, 10 years, or to ages 65, 67 or 70. You can also select a waiting period (Elimination Period) of 30,60,90,180 or 365 days. This means that if you bought a policy with a 90 day waiting, the insurance company will pay no benefits for the first 90 days of your injury. If you remain disabled, they will start paying after 90 days. (Typically, with claims processing time, etc…you will see your first later than 90 days).
Disability policy features and definitions vary based on age, occupation, insurance carrier ad state of residence.

What does it cost?

A typical LTD plan will cost about 2-4% of your income to protect about 60% of your income on a tax free basis. Costs will be based on riders purchased, your age, health status, occupation, state of residence and insurance carrier. Contact us for a customized quote specific to your individual situation using the “Request a Quote” button on the right.

Disability Income Insurance policies have limitations and exclusions. Features and costs vary by insured’s occupation, age, health and state of residence. For costs and complete details of coverage, contact your personal insurance broker/agent. The information presented here is not specific to any individual’s personal circumstances and is provided for general information and educational purposes based upon publicly available information from sources believed to be reliable. We cannot assure the accuracy or completeness of these materials. The information in this article may change at any time and without notice.