Predicting Your Long Term Disability Insurance Needs

Long term disability insurance is an insurance policy that provides coverage for people who cannot work because of an injury or illness. Depending on your disability, the disability can either last until you reach retirement age or until you are healthy enough to return to work. The insurance pays you a portion of what you would normally earn, allowing you to earn money while you recover. While short-term disability coverage is usually fairly straight-forward, long term disability insurance can be a little trickier. But if you know what to look for, you should be able to find a policy that takes care of your needs without costing you too much money on the long run.

Disability Insurance Basics

Disability insurance coverage can be divided into two categories - short term insurance and long term insurance. Most disability insurance policies provide both types of coverage, though there are policies that are strictly short-term. There are several ways you can get disability insurance, depending on your needs.

  • Social Security - provides long term disability benefits if your injury left you unable to work anywhere. The size of the coverage depends on how many years you worked and how long you contributed to Social Security.
  • Private Insurance - insurance you can buy from insurance companies. Such policies usually cover all types of debilitating injuries, and their terms can be quite generous, but they come with higher premiums than any other option.
  • Employer-supplied disability insurance can vary depending on the state.  There are two categories of insurance; workers compensation and group insurance.

Finding the Best Long Term Disability Insurance

When looking at your long term disability insurance, there are several things you should consider. They include:

  • Types of Premiums - long term disability insurance policies have either level premiums - premiums that stay constant for as long as you use the policy - or premiums that increase as you age.
  • Policy Length - policies either last until you reach retirement age or for a fixed period of time. If it's the later, you may have an option of renewing it if necessary.
  • Waiting period - a period of time that has to pass before you begin receiving insurance payments. Waiting periods differ depending on the policy. Usually, the periods drop in inverse proportion to the length of the waiting period. Depending on your financial situtation, it may be in your best interest to choose a policy with a longer waiting period.
  • Residual benefits - benefits designed to make up for any loss of income if you recovered enough to be able to work but not quite enough to be able to work in full capacity. Only some disability insurance policies have that.

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