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Disability Insurance For Individuals

Disability Insurance

Short Term Disability Insurance

Long Term Disability Insurance

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The definition of disability will vary depending on your employer’s plan. Some policies consider you disabled when you’re unable to perform your job duties, while others pay only if you’re unable to perform in any job suitable for you based on your training, education and experience. Other policies require that you not be gainfully employed while you’re collecting benefits or that you are unable to earn a certain percentage of your pre-disability income because of injury or sickness.

There are some policies that will pay you a portion of your total disability monthly benefit amount if you have lost a part of your income due to a disability. Other policies and plans may include a rehabilitation provision that requires you to take part in a vocational rehabilitation program in order to continue to receive benefits.

Keep in mind that many policies and plans have exclusions and limitations and may not fully cover certain disabilities and pre-existing conditions. Benefits differ from company to company, so speak with your benefits administrator for your workplace’s complete plan details.

Benefits may begin after you have met an elimination period – a plan-defined period of time, starting with the date you are disabled from work and the number of days you must continue to be disabled until benefits may begin. Most group long term disability plans have an elimination period of 90 days or 180 days. Under most group plans, generally the employer selects the elimination period.

When you choose disability coverage, consider how long you can manage without a paycheck. If you have significant savings, you may be willing to choose a longer elimination period. Typically, the longer the elimination period, the lower the premium.

With most group disability plans, the employer selects the maximum duration of benefits. The most frequently offered maximum benefit periods are two years, five years, and to age 65. Policies with shorter maximum benefit periods typically have lower premiums.

Disability coverage that replaces at least 60 percent of your after-tax income is generally recommended.

To estimate the benefit amount you would need if you became disabled, ask yourself how much monthly income would cover your living expenses. Household expenses may include mortgage and car payments, groceries and child care. Consider all these factors to help you come up with an appropriate amount.

The MetLife Disability Calculator is another handy resource you can use to estimate the amount of disability insurance income you would need to help maintain your current standard of living.

Social Security disability benefits may be available to eligible individuals who experience a disability that is expected to last longer than one year, in addition to other requirements. Social Security disability benefits are not intended for temporary conditions. You should also note that Social Security’s disability rules are different from those of other government or private programs. For more information on Social Security disability benefits eligibility, visit the Social Security Administration’s website at www.ssa.gov.

Check with your workplace benefits specialist to find out if your company offers group disability insurance, and if you are eligible. If so, your benefits administrator can provide you with plan details.

You will need written proof of your disability from your treatment provider(s) to file a claim. You may also need to provide additional medical records concerning the details of your disability. Your insurer may also want you examined at their cost and/or may require financial information from you. Please see your company’s benefits administrator for details.

MetLife offers various ways to submit your claim based on your plan, including online, mail, phone and fax options. Plus, you can count on MetLife to provide caring, compassionate and accurate claims service if and when you experience a disability.

Disability Insurance: Why You Need It and How to Get It

Your most valuable asset isn’t your house, car or retirement account. It’s the ability to make a living.

Disability insurance pays a portion of your income if you can’t work for an extended period because of an illness or injury.

“Everybody who relies on a paycheck should have this coverage,” says Keith Hoffman, the vice president of disability insurance at NFP Corp., an insurance brokerage and consultancy headquartered in New York.

Here’s what you need to know:

Why you need disability insurance

The chance of missing months or years of work because of an injury or illness may seem remote, especially if you’re young and healthy and you work at a desk.

But more than one in four 20-year-olds will experience a disability for 90 days or more before they reach 67, according to the Social Security Administration.

“You never think it’s going to be you,” says Carol Harnett, president of the Council for Disability Awareness, an insurance industry group.

More than one in four 20-year-olds will experience a disability for 90 days or more before they reach 67.

One reason people shrug off the risk is they think about worst-case scenarios, such as spinal cord injuries leading to quadriplegia or horrific accidents that result in amputation, Harnett says. But back injuries, cancer, heart attacks, diabetes and other illnesses lead to most disability claims.

“The questions people have to ask are, ‘What would you do if you couldn’t work? How far could you go without a paycheck?’ ” Harnett says.

Types of disability insurance

There are two main types of disability insurance — short-term and long-term coverage. Both replace a portion of your monthly base salary up to a cap, such as $10,000, during disability. Some long-term policies pay for additional services, such as training to return to the workforce.

Short term vs. long-term

Disability policies vary in how they define “disabled.” Some policies pay out only if you can’t work any job for which you’re qualified. Others pay out if you can’t perform a job in your occupation. Some policies cover partial disability, which means they pay a portion of the benefit if you can work part time. Others pay only if you can’t work at all.

How to get disability insurance

Here are ways to get coverage:

  • Sign up for employer-sponsored coverage at work. Most employers that offer disability insurance pay some or all of the cost of premiums. Five states provide or require employers to provide short-term disability benefits, according to the Society for Human Resource Management: California, Hawaii, New Jersey, New York and Rhode Island.
  • Buy disability insurance through the workplace. Some employers don’t pay for disability coverage but offer it as a voluntary benefit. This lets employees buy coverage through the employer’s insurance broker at a group rate.
  • Buy disability insurance through a professional association. Many professional groups offer members coverage at group rates.
  • Buy an individual disability insurance plan. You can get it from an insurance broker or directly from an insurance company. Big sellers of individual disability insurance include Guardian, MassMutual, Northwestern Mutual and Principal. Most individual disability policies sold are for long-term coverage, although some companies also offer short-term policies.

Buying your own disability policy

Consider buying a policy if you don’t have any or enough disability coverage at work or are self-employed. Employer-sponsored disability insurance usually pays only a portion of your base salary, up to a cap. It’s a good idea to supplement that coverage if your salary far exceeds the cap or you depend on bonuses or commissions.

An insurer will consider other sources of disability insurance to determine how much coverage you can buy. Generally, you can’t replace more than 75% of your income from all the coverage combined, Hoffman says.

Buying your own policy lets you:

  • Customize the coverage with extra features, such as annual cost-of-living adjustments
  • Choose the insurance company with the best offerings
  • Keep the coverage when you change jobs. Employer-paid coverage ends when you leave the company. (You might be able to take the coverage if you pay the full premium for disability insurance offered through the workplace.)
  • Control the disability insurance. The coverage stays intact as long as you pay for it. But employer-sponsored coverage will end if the employer decides to stop providing disability benefits.
  • Collect benefits tax-free if you become disabled. If the employer pays for the coverage, you must pay taxes on the benefits.

The annual price for a long-term disability insurance policy generally ranges from 1% to 3% of your annual income, according to the Council for Disability Awareness. A variety of factors affect the cost.

  • Your age and health: You’ll pay more the older you are and the more health problems you have
  • Your gender: Women usually pay more because they tend to file more claims
  • Whether you smoke: You pay less if you don’t smoke
  • Your occupation: You’ll pay more if you work in a job with a high risk of injuries
  • The definition of disability: The broader the definition of disability, the higher the premium. A policy that covers you if you can’t work in your own occupation but could earn income in a lower-paying job will cost more than a policy that covers you only if you can’t work at all.
  • Length of waiting period: This is known as the elimination period. You can reduce the premium by increasing the waiting period before benefits kick in.
  • Your income: The more income you have to protect, the more you’ll pay for coverage
  • Length of benefits: The longer the period that the policy promises to pay out if you become disabled, the more you’ll pay in premiums
  • Extra features: Additional features, such as cost-of-living adjustments to protect against inflation, will increase the premium

Where to buy individual disability insurance

The following companies offer disability insurance to individuals.

Best Disability Insurance Companies

Insurance Contributing Editor

Updated on 12/11/2017

Disability insurance allows workers who are unable to work for an extended period of time to receive a percentage of their income so they can support themselves. Depending on the disability, individuals may opt for short-term or long-term disability.

Many employers offer group disability plans, which can be less expensive than individual coverage. Individual coverage can supplement group insurance, or it can be used by individuals who do not have an employee group disability plan option. Governmental insurance is also available, although not everyone will qualify.

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Compare Reviews for Top Disability Insurance Companies

Aflac is a large insurance company that offers a range of insurance policies, from life insurance to dental insurance. The company also offers short-term disability insurance, which pays benefits when a person is unable to work.

Unum Insurance Company is an insurance company that was founded in 1848. The company is considered to be the leading provider of group disability benefits in the United States.

Mutual of Omaha is a large insurance and financial services company located in Omaha, Nebraska. The company offers a selection of disability insurance plans, including accident-only plans and accident and sickness plans.

Colonial Life & Accident Insurance Co. is an insurance company headquartered in Columbia, South Carolina. Founded in 1939, the company offers consumers disability insurance for when they are injured or sick.

Headquartered in New York, NY, MetLife is a company that is known for offering life insurance. MetLife also offers disability insurance, which consumers can purchase via their employer or through an individual plan.

Liberty Mutual is one of America’s biggest insurance companies, founded in 1912 and headquartered in Boston, Massachusetts. The company offers group disability plans that employers can provide employees.

Cigna offers short-term disability insurance plans to employers and employees. The company is headquartered in Bloomfield, CT, and they have been offering insurance solutions since 1982.

Matrix Absence Management is a company that works with employers to provide people with disability insurance should they be unable to work. The company is a member of the Tokio Marine Group, and they are headquartered in Phoenix.

The Hartford is one America’s oldest insurance companies, founded in 1810 in Hartford, CT. Today, the company offers a range of disability insurance policies, including long term and short term disability insurance.

Aetna is one of America’s largest insurance providers. The company offers individual disability insurance plans, and they can cover lost income for weeks or months when a consumer is not able to work due to injury or illness.

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What to consider when looking for disability insurance

Cash benefit based on salary

Most types of disability insurance offer cash benefits based on how much salary policyholders would ordinarily receive if they were still able to work. These cash benefits allow users to continue supporting themselves and their families while they are unable to work.

  • Group short-term disability plans typically cover about 60% of regular salary: For every $100 the consumer usually makes, he or she will probably get about $60 via disability insurance. This money can help pay bills or buy food while the employee is unable to work.
  • Individual coverages may be higher: Users can purchase supplemental insurance to get up to $70 or $80 per every $100 they would normally earn, for instance.
  • Inflation riders: Users can purchase a rider for a small increase in premium that will increase their benefits each year, based on the rate of inflation.
  • Residual or partial payouts: A rider can be purchased on certain disability insurance policies that allow you to return to work part-time, receive partial salary and still receive payouts from your policy.
  • Individual factors in price: Besides how much salary a person earns, other factors that determine the price of disability insurance include: age, sex, current health condition, bad habits like smoking and type of job.

Benefit time period

Consumers can choose from two major types of disability insurance: short term and long term. Within each of these types, they can pick from varying lengths of coverage, with longer lengths generally costing more.

  • Short-term coverage: Short-term coverage is offered by many employers as a benefit; it allows for workers to collect disability benefits for a limited period of time, ranging from 30 days to two years.
  • Long-term coverage: Users who are permanently disabled or who are unable to work for longer than a year may need to rely on long-term coverage, which can last from 2 to 10 years, or for the rest of the insured’s lifetime.
  • Until retirement age: Users can elect to stop coverage once they reach retirement age. This often makes sense, as Social Security and other retirement benefits should begin to apply.

Group plans

Many employers offer group disability plans as a benefit of employment. These plans are purchased by employers at a discounted rate and are often cheaper for employees to sign up for than individual disability insurance. They typically include short-term disability coverage.

  • Pay up to 60% of salary: These plans typically cover up to 60 percent of the user’s salary in the event of disability.
  • Often time- and benefit-limited: Group plans tend to offer short-term coverage, often lasting from 30 days to two years, although some employers may offer long-term policies. Payout benefits may not be as high as consumers could purchase on an individual basis.
  • Lower premiums: Users pay typically less premium each month for employer-sponsored insurance, and often payments are deducted automatically from pre-tax pay.

Individual coverage

In addition to group insurance, most disability insurance companies offer individual disability insurance. It can serve as supplemental insurance that offers additional benefits on top of employer-sponsored insurance, especially for providing longer benefit periods, or it can serve as stand-alone disability coverage.

  • Pay higher benefits: Individual insurance plans may offer benefits of as high as 80 percent of the user’s base salary.
  • May be longer duration: Individual disability insurance can be used to provide a longer-term coverage than group plans.
  • Higher premiums: Individual supplements are generally more expensive than group plans.

Elimination period

The elimination period is the amount of time users have to wait after a disability begins before they can begin collecting benefits. Different insurance plans offer different elimination periods; longer periods translate to lower premiums, but policyholders must be certain they can afford to wait for benefits to kick in.

  • Standard elimination period: Employer-sponsored short-term disability plans can have an elimination period of zero to 14 days. Long-term disability insurance can have elimination periods from 30 days to one year.
  • Payment after elimination period: Something to be aware of is that individual disability policies commonly send monthly payments to insureds at the end of the month. So the first payment after a month-long elimination period would not reach a person until after the second month post-disability.
  • Lengthy elimination period: The longer the elimination period, the less expensive monthly premiums are, but users will have to wait longer before insurance kicks in after suffering a disability.

Locked-in premiums

Users can sometimes purchase disability insurance that has a locked-in premium, meaning the premium amount doesn’t change regardless of economic conditions. It is often called non cancelable coverage.

  • Users pay same premium year after year: Locked-in premiums allow users to continue to pay the same amount over the course of years, making financial planning easier.
  • Installment vs. lump sum: Users may need to pay the same amount monthly or may be able to make one annual payment to get coverage.
  • Guaranteed renewable: Another option similar to non cancelable coverage is a policy that guarantees you can get the same benefits from the same insurance company every year. With this approach, however, the insurance carrier can raise your premiums in certain circumstances.
  • Return and waiver of premiums: Consumers can add additional features to a policy that will require insurance companies to return premiums if no claim has been made after a specific period of time, as well as waive further premium payments if an individual has been disabled for more than 90 days.

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