Long-term disability insurance replaces a portion of your income if you become unable to work due to injury or illness. Most policies cover between 60-70% of your pre-disability income, providing crucial financial support during recovery periods. Benefits typically begin after a waiting period, often 90 days, during which short-term disability or emergency savings might be utilized. The definition of disability varies between policies, with “own occupation” coverage being more comprehensive than “any occupation” coverage. Unlike Social Security Disability, private disability insurance often has less stringent qualification requirements and higher benefit amounts.
Policy Features Worth Considering
Non-cancelable and guaranteed renewable policies ensure your coverage cannot be terminated and premiums cannot increase as long as you pay on time. Cost-of-living adjustment riders help benefits keep pace with inflation during extended disability periods. Future increase options allow you to purchase additional coverage without medical underwriting as your income grows. Residual or partial disability benefits provide partial payments if you can work but earn less due to your disability. Return-to-work incentives support your transition back to employment without immediately terminating all benefits. Mental health and substance abuse coverage limitations are common, often restricting benefits to 24 months for these conditions. Some policies offer rehabilitation benefits to help cover costs associated with retraining or education needed to return to work. Student loan payment protection riders specifically earmark a portion of benefits for outstanding educational debt.
Disability Insurance for Self-Employed Professionals
Self-employed individuals face unique challenges when obtaining disability insurance, as they lack employer-sponsored group coverage options. Business overhead expense (BOE) insurance can complement personal disability coverage by paying for ongoing business expenses while you’re disabled. Documentation of stable income through tax returns for at least two years typically strengthens disability insurance applications for entrepreneurs and freelancers. Association group plans through professional organizations sometimes offer more affordable disability coverage options for independent contractors and business owners.