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Is It Worth Getting Long Term Disability Insurance

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Best For No Medical Exam: Principal Financial Group

Long Term Disability Insurance 101 (Long Term Disability Insurance 1/2)

Principal Financial Group

Principal Financial Group offers a few different disability insurance products, including the Simplified DI program. This allows consumers to get up to $6,000 a month in long-term coverage faster and with fewer requirements, like no medical exam, earning them our top spot in the no medical exam category.

  • Streamlined process is quick and easy

  • Principal will combine different periods of disability to help reach the policys elimination period

  • Benefits of up to $6,000 per month are available with simplified underwriting

  • Employment requirement is only 20 hours per week

  • Online applications are not available

  • Final answer can take a few days to receive

With a history dating back to 1879, Principal Financial Group has a long and successful track record of offering quality insurance coverage. They hold an A+ financial strength rating from AM Best and offer a variety of disability insurance products to suit consumers needs.

Principal offers individual disability income insurance policies with up to $20,000 in monthly benefits, though this maxes out at $6,000 if you want simplified underwriting and no medical exam. Elimination periods range from 30 to 365 days, with benefits lasting two or five years, or through retirement .

Unlike many other companies that require 30 hours of weekly work to be considered, Principal only requires you to work a minimum of 20 hours a week in order to qualify for a policy.

What Is Long Term Care And Is It Necessary

According to, long term care is a range of services and supports you may need to meet your personal care needs. Most long-term care is not medical care, but rather assistance with the basic personal tasks of everyday life.

  • Examples of long term care include nursing home care, assisted living facilities and home care. Long term care is often defined by assistance with the activities of daily living, which can be anything from dressing and eating, to moving around and going to the toilet.

While long term care is not medical in nature, it is often needed most by those suffering debilitating medical conditions like strokes, Parkinsons, or Alzheimers. However, old age catches up to all of us, and the American Association for Long Term Care Insurance predicts 68% of people who are 65 or older will require long term care. Thats over two-thirds of all seniors. It may be unsurprising then that 10 million Americans already have long term care insurance.

Unfortunately for those who need it, not only can long term care be quite expensive, but the cost of care has also been rising over time. Estimates currently range from an average annual cost of $43k for care in an assisted living facility, to $92k for a private room in a nursing home. In 20 years that price is projected to increase to an annual cost of roughly $131k a 42% increase.

Michigan Lawyer Explains The Difference Between Workers Comp Vs Long Term Disability And Explains How You Can Get Both At The Same Time

We frequently get telephone calls and emails from people hurt on-the-job who are forced to make a claim for long term disability insurance instead of workers compensation. It usually happens when there is some controversy about how the accident occurred or what the medical shows. It is an easy decision to accept LTD insurance when faced with the prospect of not having any income. But this is not always the best course of action for people hurt at work.

Employers want people on LTD insurance because it costs them less money. Here is some information about workers comp vs long term disability that every disabled employee should know.

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Not All Jobs Occupations Are Treated Equally

Disability insurance is designed to protect your income, so it should come as no surprise that your career will have a major impact on your premium rate. Insurance companies classify jobs based on the hazards of the work, as some are more prone to injury or illness than others.

Your occupation will also be assessed based on the difficulty of returning to work following an injury or illness. The more difficult it is to perform a job with certain injuries or illnesses, the more the insurance company will likely have to pay in benefits.

Job occupations are grouped into specific risk classes, which are numbered on a scale of 1 to 5 or 6. Typically, the higher the number, the less risk an insurer considers that profession. The lower the risk, the lower the premium rate.

When you compare policies, you should note that insurers assign different risk classes to the same profession. One insurer may designate a job as a 4, while another may classify it a 5.

Whats The Difference Between Total And Partial Long Term Disability Insurance


Total long term disability insurance pays you benefits if an illness or injury leaves you unable to work in any capacity, and can pay you benefits up to the time you reach retirement age, depending on the details of your policy. Partial long term disability insurance pays you benefits even if you are able to work, but not at your full capacity, limiting your earnings.

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What Can You Use Long

Long-term disability insurance is there to help you with everyday expenses when you lose your income as a result of a disability. For instance, you can:

  • Pay your utility and grocery bills
  • Make your rent or mortgage payments
  • Cover additional medical expenses
  • Keep yourself and your family clothed

In essence, you can use your benefits to pay for anything youd use your income on, even the occasional date night!

How To Choose A Long

There are a few key factors to consider when youâre comparing different companies and policies:

  • Price: Every insurer has its own way of measuring risk, so you may get more competitive rates from one company than others.

  • Occupation-friendliness: Some providers offer more affordable pricing to people in certain fields, like lawyers and dentists.

  • Riders offered: Not every company sells every disability rider. Make sure your top choice also offers all of the features you want.

  • Service and ratings: Consider a companyâs customer service ratings and other details like whether you can manage your policy online.

Everyone should consider including long-term disability in their insurance plans. Itâs particularly important if your family counts on your income or youâve put a lot of time and money into a career and don’t want to risk losing that investment.

Getting a policy is simple: work with an independent agent to compare quotes, fill out an application, and go through a simple medical exam to secure a policy and protect your earnings.

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Long Term Disability Insurance

Available through the workplace, this coverage helps maintain your standard of living if you’re unable to earn a paycheck due to an accident or illness

Covers essential living expenses: can help pay for food, clothing, utilities, your mortgage, car payments and more

Direct monthly payments: receive a portion of your salary paid directly to you each month if youre unable to work

Rehab incentives: coverage may include financial incentives designed to help you transition back to work

Easy claims filing: report claims online or by phone

Competitive rates: this group coverage is offered only through your employer

For complete plan details, talk to your companys benefits administrator.

Duration: 2:18

What Is Basic Ltd Insurance

Is It Hard To Get Approved For Long Term Disability Insurance?

LTD insurance protects a portion of your salary if you are unable to work due to serious injury or illness. When you enroll in LTD coverage, it pays you a percentage of your monthly earnings if you become disabled. In any case, it will not exceed $240 a month. You may want to consider paying for supplemental LTD insurance if you would like to protect more of your income.

If eligible, you will automatically be enrolled in basic LTD insurance, even if you waive medical coverage. You do not need to provide evidence of insurability .

The PEBB Program’s full employee benefits package includes basic LTD insurance at no cost to you. It provides:

  • Benefit: 60 percent of the first $400 of your predisability earnings , reduced by any deductible income .
  • Minimum: $50/month

Read Also: How To Calculate Disability Retirement Pay

How Does Long Term Disability Work For The Advantage Of The Employee

Taxation of Disability Benefits If you become disabled and make a claim to receive benefits, the monthly benefits may or may not be taxable as income. Your employer offers long term disability coverage through a group plan. The plan promises to pay 40% of your salary if you become disabled and cant work.

What Are The Types Of Disability Insurance

Now, there are two types of disability insurance youll see a lot of: short term and long term. They basically do the same thing in how they replace part of your monthly salary. But well get more into that later.

Even though they do the same thing, short-term and long-term disability insurance have some differences you need to know about. Heres how they stack up:

Why would you get it?

Only if your employer offers it at no cost to you

If you rely on your income and you dont have savings to replace it long term

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Other Ways To Find Disability Insurance

The following programs also offer financial help in case of a disability, but they have limitations.

  • Social Security pays disability benefits, but its difficult and time-consuming to qualify, and the payments are low. The average monthly disability benefit in 2017 was $1,172.

  • State disability programs are offered in California, Hawaii, New Jersey, New York and Rhode Island. They provide short-term disability coverage, in most cases for up to six months, according to Life Happens, an insurance industry trade group.

  • Workers’ compensation insurance replaces a portion of income if youre disabled because of a work-related injury. All states require employers to have workers compensation coverage for their employees. Most long-term disabilities, however, are not the result of work-related injuries.

Although these programs can help, they dont fully cover the risks of losing the ability to work after an illness or injury. Disability insurance is the smart bet to provide a safety net for your future.

Commonly Asked Questions About Long Term Disability

Long Term Disability Insurance Claims

In general, its best to have enough disability coverage to replace 60% of your after-tax income. However, this number can vary on a number of factors, such as recurrent debt payments and monthly living expenses.

Use our Disability Insurance Coverage Calculator to find out how much coverage is right for you.

The length of time you can receive benefits depends on your policys Maximum Benefit Period, which is determined by your employer. Once the elimination period is satisfied and you continue to meet the definition of disability, your Long Term Disability Insurance benefits can extend through the Maximum Benefit Period.

The disability benefit may be reduced if you are receiving income from other insurance policies, retirement or government programs.

Recommended Reading: How To Apply For Disability In Texas

Best For Rider Options: Mutual Of Omaha


If youre looking for long-term disability insurance that lets you really customize your policy and keep coverage for as long as possible, Mutual of Omaha may have what you need. They are our top choice for best policy rider options, allowing you to choose between features like future insurability, critical illness coverage, and return of premium, to name a few.

  • Up to $12,000 per month in benefits

  • Premiums stay level through age 67

  • Many built-in policy benefits

  • Multiple additional riders to choose from

  • Shortest elimination period is 60 days

  • Coverage can be continued through age 70, but premiums will increase

  • Quotes not available online

  • Policies must be purchased through an agent

Providing insurance coverage since 1909, Mutual of Omaha has become a trusted name throughout the United States. They hold an A+ financial strength rating from AM Best and are a Fortune 500 company with nearly 12 million members.

With this long-term policy, youll enjoy a plethora of built-in benefits that include total presumptive disability, waiver of premium, recurrent disability, transplant donor benefits, rehabilitation benefits, and a survivor benefit. If you want or need more, you can also add a critical illness rider, future insurability option, accidental medical expense benefits rider, or return of premium benefits rider, thus earning Mutual of Omaha our nod as best for rider options.

When Is It A Good Idea To Get Long Term Care Insurance

Now that you understand what long term care is, and the annual costs associated with it, we can give some guidance on when it might be a good idea to get long term insurance.

First, its best to get long term care insurance when youre young. As with life insurance or health insurance, the older you are, the riskier your policy is considered, and the higher your premiums.

Getting a policy at age 45 compared to age 60 can save you $440 a year on premiums for a standard 3-year long term care policy. Not only that, but if you wait to apply for long term care insurance once you know you need it, youre likely to get denied.

That being said, you dont want to be too young . A good way to evaluate the value youre getting for your long term care insurance is to compare it to self-insuring through savings over the same period of time.

  • For example, a married 30-year old male could get a 3-year, $3,500 a month LTC policy for $78 a month. Putting the same amount in a mutual fund with an average rate of 5.5% compounded monthly, would yield $106,411 in savings by age 65. This is slightly less than long term care insurance, but with a lot more flexibility on how to spend. If you dont end up needing long term care, that money is still all yours to spend.

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When Does Long Term Disability Insurance Kick In

Long term disability coverage starts after you are approved by the insurance company, you accept the offer for coverage that is made, and you begin paying your premiums.

When long term disability benefits start isnât as straightforward though.

Your policyâs elimination period will determine when long term disability benefits kick in if you become disabled. This is also known as the waiting period because it states the period of time you must wait after your disabling event before you begin receiving benefits.

When applying for long term disability coverage, your waiting period options typically include 30, 60, 90, 180, or 365 days.

Whats The Elimination Period

How to Get Long-Term Disability Insurance (Long Term Disability Insurance 2/2)

While short term disability insurance begins paying benefits within a couple weeks following a qualifying illness or injury, long term disability insurance requires a longer waiting period, called an elimination period, before a policyholder begins receiving benefits. The length of the elimination period varies by policy but is often around 90 days. When considering a disability policy, take into account how you will cover your expenses during the elimination period. Do you have an emergency fund to cover your lost income and any medical bills you accrue during this time? If not, you may consider purchasing additional coverage to protect you immediately following a disabling illness or injury.

Read Also: How Much Does Disability Pay In California

Why Getting Long Term Disability Insurance Is Worth It

Few people know that long-term disability insurance can be as important than signing up for life insurance. That’s because you’re more likely to suffer from a disability or condition than you are to die prematurely.

In the event that a disability or condition does arise, it’s important to know that you and your family are covered, even if you are unable to work.

Read on to learn more about long-term disability insurance, and how it can save you and your family during difficult times.

How Do I Get Individual Disability Insurance

If youre self-employed, your employer doesnt offer disability insurance, or you want to supplement the policy your employers does offer, you can apply for an individual disability policy. Individual disability insurance elimination and benefit periods may differ from group disability insurance, but a financial representative can help you choose the right coverage for your situation. If youd like some help understanding what type of coverage makes sense for you and applying for a policy, get in touch with a financial representative who can help you make a decision.

Policy Form # GP-1-STD-15.

Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America , Pittsfield, MA. BLICOA is a wholly owned stock subsidiary of The Guardian Life Insurance Company of America , New York, NY. Product provisions and availability may vary by state.

Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.


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Can I Get More Than What My Employer Provides

Definitely. You can supplement your employerâs coverage with a private plan. Or if you donât have coverage through your employer, you can get private disability insurance coverage. You could buy a policy that pays a larger benefit or has coverage that kicks in sooner , for example. A private plan also allows you to take your coverage with you throughout your life. If you leave an employer, you typically lose your disability coverage that was provided through the job.

I Followed The Example Of My Fellow Business Insider Writer

Is Long

Last summer, my friend and fellow Business Insider writer Jackie Lam wrote about how she experienced an eye injury that left her unable to work for a month. After that wake-up call, she signed up for disability insurance from Freelancers Union, a nonprofit that offers a range of services and benefits to freelancers, including disability insurance.

Jackie’s policy costs $23 per month and includes a benefit worth $2,500 per month. My mortgage and health insurance alone are more than $2,500 per month, so I definitely wanted a higher level of coverage.

Disability insurance from Freelancers Union comes with a 30- or 90-day elimination period, which is how long you have to wait before coverage begins. I took the maximum coverage available for my annual income and age. I pay $36.12 per month for $5,000 per month in coverage.

While I pay Freelancers Union automatically every month with my business credit card, the policy is actually underwritten by The Guardian Life Insurance Company of America. No matter where you buy insurance, it’s important to understand how the policy works and who pays your claims if you do become disabled.

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