Do you really need long-term disability insurance?

Read on, then decide.

What if you were one of the people who unexpectedly couldn’t work? How would you replace your income?

Long-term disability (LTD) insurance was created to help replace a portion of your income should you need it. It’s just that most people don’t think they are ever going to need it.

Part of financial wellness is protecting what you have. For most everyone, your income is your lifeline. Sure, emergency savings could cover a few months. But what if you are one of millions diagnosed with a serious illness that keeps you out of the workforce for an extended period of time?

Simply put, LTD protects your paycheck when you’re injured and unable to work. Depending on the type of insurance — like short-term, which fills the gap of lost wages when you are out of work for less than six months. Or LTD coverage, which can last from a few weeks up to a year or age-based up to age 67.²

How would you replace your income?¹

25 percent of Americans who will experience a disability in their careers before retirement (U.S. Social Security Administration, Fact Sheet, 2018).

90 percent of long-term disabilities that result from illnesses rather than accidents (Council for Disability Awareness, 2018).

70 percent of working Americans that couldn’t make it a month without a paycheck before experiencing financial hardship (Life Happens survey, 2018).

LTD can help you:

  • Protect your paycheck.
  • Continue to provide for your family.
  • Avoid tapping into retirement savings or other assets to cover basic living expenses.
  • Avoid going into debt to pay bills.
  • Reduce overall stress and stay focused on getting better.
  • Get back to work sooner.

It’s usually offered through employers, and the premiums may be paid by you, your employer or both.³

If your employer doesn’t offer LTD insurance, or you’re self-employed, you can still buy a policy; however, a medical exam may be required.4

LTD insurance can be sold with a variety of options that increase the monthly premium and should be weighed carefully. Some of these options can include:

  • Some LTD plans exclude certain diseases and pre-existing conditions that others don’t.5
  • Some plans only pay if you can’t do any job, not just the job in which you were working when you became disabled.6
  • Some require you to file for Social Security disability insurance, which can reduce the long-term disability monthly payment, but that can also help you qualify for Medicare health benefits that aren’t covered by insurance after two years.6
  • LTD plans also won’t continue to pay out your monthly payments to survivors if you pass away while receiving them. 7
  • They will pay out a lump sum totaling some multiple of the disabled person’s monthly benefit if a person dies while they’re disabled and the plan offers a survivor’s benefit.7

It pays to pay attention to the coverage and the good news is disability insurance will pay you directly (usually between 50% and 70%) so you can use the money as you see fit.³

With this kind of paycheck protection in place, you can expect the best but prepare for the rest so you can get well, stay well and retire well.

Related Items

  1. Breeze website, infographic showing disability stats, 2018, last accessed November 24, 2020, https://www.meetbreeze.com/?tunetrackingid=102188ae8571e4bfbdb5485a3483a6
  2. Chisolm, Chisolm & Kirkpatrick Law LTD, ERISA law article, How long can you stay on Long-term Disability (LTD), last accessed December 15, 2020; https://cck-law.com/blog/how-long-can-you-stay-on-long-term-disability-ltd/
  3. Dave Ramsey.com, article What is disability insurance and do you need it, February 2, 2019; last accessed December 15, 2020; https://www.daveramsey.com/blog/disability-insurance
  4. PolicyGenius.com, article, Long-term Disability Insurance FAQs, Colin Lalley, December 17, 2018; last accessed December 15, 2020; https://www.policygenius.com/disability-insurance/learn/long-term-disability-insurance-faqs/
  5. PolicyGenius.com, article, Getting disability insurance with a pre-existing condition, Zack Sigel, April 17, 2018; last accessed December 15, 2020; https://www.policygenius.com/disability-insurance/getting-disability-insurance-with-a-pre-existing-condition/ Some LTD plans exclude certain diseases and pre-existing conditions that others don’t.
  6. Disability Secrets by NOLO.com, article, Requirements for Long-term Disability Insurance, Aaron Hotfelder, J.D., University of Missouri School of Law, last accessed December 15, 2020; https://www.disabilitysecrets.com/resources/disability/disability-social-security/requirements-long-term-disability.htm
  7. Dell Schaefer Disability Law Firm website, last accessed December 15, 2020; https://www.diattorney.com/if-a-disability-insurance-claimant-dies-can-any-family-members-continue-to-collect-the-decedents-long-term-disability-benefits/

All guarantees are based on the financial strength and claims paying ability of the issuing insurance company, who is solely responsible for all obligations under its policies.

CN1472984_0123