Long-term disability insurance is a type of coverage that replaces a portion of your income if you become unable to work due to a serious illness or injury.
It can provide financial security and peace of mind for you and your family, especially if you depend on your income to pay your bills and support your lifestyle.
But how do you choose the best long-term disability insurance for your needs and budget? There are many factors to consider, such as the amount of coverage, the length of benefits, the elimination period, the policy features, and the cost.
Let us dig in and know how we can find the best long-term disability insurance based on these factors.
Best Long-Term Disability Insurance Companies
There are many long-term disability insurance companies in the market, but not all of them offer the same level of service, quality, and value.
To help you narrow down your choices, we have reviewed and rated some of the best long-term disability insurance companies based on their online buying process, coverage options, financial strength, and policy features.
Here are our top picks for 2023:
- Breeze: Best Overall
- Assurity: Best for Risky Occupations
- Guardian Life: Best for Customization
- Principal Financial Group: Best for No Medical Exam
- Mutual of Omaha: Best for Rider Options
Summary: Best Long-Term Disability Insurance Ratings
| Company | Online Buying Process | Coverage Options | Financial Strength | Policy Features | Overall Rating |
|---|---|---|---|---|---|
| Breeze | 5/5 | 4/5 | 4/5 | 4/5 | 4.3/5 |
| Assurity | 4/5 | 4/5 | 4/5 | 5/5 | 4.3/5 |
| Guardian Life | 3/5 | 5/5 | 5/5 | 5/5 | 4.5/5 |
| Principal Financial Group | 4/5 | 4/5 | 5/5 | 4/5 | 4.3/5 |
| Mutual of Omaha | 3/5 | 4/5 | 5/5 | 5/5 | 4.3/5 |
Graphical representation of the best long-term disability insurance ratings by Michael Ndenga
What Is Long-Term Disability Insurance?
Long-term disability insurance is a type of insurance that pays you a monthly benefit if you become disabled and unable to work for a long period, usually more than 90 days.
The benefit amount is usually a percentage of your pre-disability income, typically 60% to 70%.
The benefit period is the maximum length of time that you can receive the benefit, which can range from two years to your retirement age.
The elimination period is the waiting time before the benefit starts, which can vary from 30 days to 365 days.
Long-term disability insurance can help you cover your essential expenses, such as your mortgage, rent, utilities, groceries, car payments, and medical bills if you lose your income due to a disability.
It can also help you maintain your standard of living and protect your savings and assets from being depleted.
How Does Long-Term Disability Insurance Work?
To get long-term disability insurance, you need to apply for a policy from an insurance company or through your employer.
You will need to provide information about your income, occupation, health, and lifestyle.
You may also need to undergo a medical exam and provide medical records.
The insurance company will then evaluate your risk level and determine your eligibility, premium, and coverage options.
If you become disabled and unable to work, you need to file a claim with your insurance company and provide proof of your disability, such as a doctor’s statement, test results, and treatment plans.
You also need to meet the definition of disability that your policy specifies, which can be either own-occupation or any-occupation.
Own-occupation means that you are unable to perform the duties of your own occupation, while any-occupation means that you are unable to perform the duties of any occupation that is suitable for your education, training, and experience.
Once your claim is approved, you will start receiving the monthly benefit after the elimination period ends.
You will continue to receive the benefit until you recover from your disability, return to work, or reach the end of the benefit period, whichever comes first.
You may also be eligible for additional benefits, such as cost-of-living adjustments, residual benefits, or rehabilitation benefits, depending on your policy features.
READ MORE: Long-Term Disability Requirements: What You Need to Know
What Does Long-Term Disability Insurance Cover?
Long-term disability insurance covers a wide range of illnesses and injuries that prevent you from working for a long time, such as:
- Cancer
- Heart disease
- Stroke
- Diabetes
- Arthritis
- Back pain
- Mental disorders
- Neurological disorders
- Musculoskeletal disorders
- Respiratory disorders
- Digestive disorders
- Infectious diseases
- Accidents and injuries
The exact conditions that are covered by your policy may vary depending on your insurance company, your occupation, and your policy features.
Some policies may have exclusions or limitations for certain conditions, such as pre-existing conditions, self-inflicted injuries, or substance abuse.
You should read your policy carefully and understand what is covered and what is not before you buy it.
What Does Long-Term Disability Insurance Not Cover?
Long-term disability insurance does not cover everything that may affect your ability to work. Some of the common things that are not covered by long-term disability insurance are:
- Short-term disabilities that last less than 90 days
- Disabilities that are caused by war, riot, or illegal acts
- Disabilities that are related to pregnancy, childbirth, or maternity leave
- Disabilities that are covered by workers’ compensation or other insurance programs
- Disabilities that are due to cosmetic surgery or elective procedures
- Disabilities that are caused by participating in hazardous activities or sports
- Disabilities that are caused by foreign travel or residence
- Disabilities that are caused by acts of terrorism or nuclear events
Again, the exact things that are not covered by your policy may vary depending on your insurance company, your occupation, and your policy features.
Before purchasing the policy, carefully read and understand the exclusions, limitations, and what is not covered.
What Does Long-Term Disability Insurance Cost?
The cost of long-term disability insurance depends on several factors, such as:
-
Your age
The older you are, the more likely you are to become disabled and the more expensive your premium will be.
-
Your gender
Women are more likely to become disabled than men and tend to live longer, so they usually pay higher premiums than men.
-
Your income
The higher your income, the higher your benefit amount and the higher your premium will be.
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Your occupation
The riskier your occupation, the more likely you are to become disabled and the more expensive your premium will be. For example, a construction worker will pay more than an accountant.
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Your health
The healthier you are, the less likely you are to become disabled and the lower your premium will be.
If you have any pre-existing conditions or chronic diseases, you may pay more or be denied coverage.
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Your lifestyle
The healthier your lifestyle, the less likely you are to become disabled and the lower your premium will be. If you smoke, drink, or engage in hazardous activities, you may pay more or be denied coverage.
-
Your policy features
The more generous your policy features, the higher your premium will be.
For example, a longer benefit period, a shorter elimination period, a higher benefit amount, or a more lenient definition of disability will increase your premium.
Summary
The average cost of long-term disability insurance is about 1% to 3% of your annual income, according to the Council for Disability Awareness.
However, the actual cost may vary widely depending on your individual situation and your policy features.
You should shop around and compare quotes from different insurance companies to find the best deal for your needs and budget.
Methodology
To choose the best long-term disability insurance companies, we evaluated more than 25 insurers across a variety of important categories, such as:
- Online buying process: We looked at how easy and convenient it is to get a quote and buy a policy online, without the need for an agent or a medical exam.
- Coverage options: We looked at the range and flexibility of coverage options, such as the benefit amount, the benefit period, the elimination period, the definition of disability, and the riders.
- Financial strength: We looked at the financial strength ratings from A.M. Best, which indicate the ability of the insurance company to pay claims and honor its obligations.
- Policy features: We looked at the policy features that add value and protection to the policy, such as cost-of-living adjustments, residual benefits, rehabilitation benefits, waiver of premium, future purchase option, and noncancellable and guaranteed renewable provisions.
We then rated each company on a scale of 1 to 5 for each category and calculated the overall rating as the average of the category ratings.
We also considered the customer reviews and feedback from various sources, such as the Better Business Bureau, Trustpilot, Consumer Affairs, and Google. The companies that scored the highest in each category and overall, and that received positive reviews from customers.
We also considered the availability and accessibility of the companies across the country.