Looking for the right disability insurance company for you? The best fit depends on the cost, the policy features, and your job.
Disability insurance is often an overlooked part of a financial plan. Many people have a disability insurance policy through their employer and don’t think about the insurance company providing it or whether or not the policy protects them as well as it should. But if you’re buying your own disability policy (whether because your employer doesn’t provide coverage or because you want to add to employer-provided coverage), it’s important not only to get the right plan, but to choose the right carrier. Looking at company ratings, the best carriers for your profession, and the policy features provided can save you time, hassle, and money in the long run when shopping for disability insurance.
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If you’re unable to work, how will you pay your bills and plan for your goals that are further down the road? Disability insurance is insurance for your paycheck, letting you replace your income while you’re unable to work.
But how do you find the right company to work with? We compare some of the biggest disability insurance companies in America by looking at their A.M. Best and Better Business Bureau ratings, proving their financial and customer service strength.
|Company||BBB Rating||A.M. Best Rating|
|Mutual of Omaha||A+||A+|
|Principal Financial Group||A+||A+|
A.M. Best ratings are an evaluation of an insurers' financial health. Ratings range from superior (A++ and A+) to poor (D).
BBB ratings are based on consumer feedback from the Better Business Bureau. Grades range from A+ to F.
Learn more about buying disability insurance.
The type of disability insurance you’re shopping for will determine the company you ultimately apply with. Long-term disability insurance is the most common form of disability insurance and will give you the most options; short-term disability is available at more select companies, and Social Security disability insurance is provided by the U.S. government rather than purchased from a private company.
Long-term disability (LTD) insurance — Provides income replacement for a minimum of two years or all the way to retirement. It replaces around 60% of your monthly income. This is the most cost-effective form of disability insurance when the cost, benefit amount, and benefit length are taken into account. Learn more about long-term disability insurance.
Short-term disability insurance (STDI) — A less common form of disability insurance. It provides up to 80% income replacement but only for one to two years. Since most disabilities average around 36 months, it may not provide enough protection for individuals and is most common as a subsidized (or free) employer benefit. Learn more about short-term disability insurance.
Social Security disability insurance (SSDI) — A benefit provided by the government. While it is free to own (unlike private disability policies, where the policyholder must pay monthly premiums), it’s notoriously difficult to qualify for due to a strict definition of disability, and it doesn’t provide a large enough disability benefit for most people. Learn more about why SSDI isn’t worth it.
In addition to the financial and consumer ratings mentioned above, you should look at the policy features and riders offered by each disability insurance company to ensure you’re getting a policy that works for your situation.
First, look at the base policy details. This includes things like the elimination period or waiting period (how long you must wait before a company will pay a benefit), the benefit period (how long the benefit will be paid out), the policy’s definition of disability, and whether you’re eligible for partial benefits if you’re still able to work, just not as much as you used to.
Then look at the built-in policy features. These will be features that are subject to availability based on your personal profile, but are standard across most carriers, and include features like a waiver of premium provision, which allows you to put off premium payments under certain situations. Recommended policy features include:
Waiver of premium
Automatic increase benefit
Presumptive total disability
Family care benefit
Survivor benefit or death benefit
Good health benefit
Finally, consider what additional riders are available. Additional riders to look into include:
Residual or partial disability benefit
Future purchase option
Critical illness benefit
There are even more options out there, like cost-of-living adjustment riders and Social Security offset riders. Some riders may add to the cost of your policy, so speak with a licensed expert to make sure you have the features that will fit your needs while not being extraneous or making your policy unaffordable.
Learn more about disability insurance features and riders.
The cost of disability insurance policies depends on a number of factors. Most prominently are:
The monthly benefit amount, benefit period, and elimination period. The higher the benefits, the longer the benefit period. The shorter the elimination period, the more your policy will cost.
Your gender, age, and health. Women tend to pay more for coverage, as do older applicants. Your health will be determined through a medical exam and may exclude some pre-existing conditions.
Your profession. An insurance company may price members of a certain profession differently than another company, even for white-collar jobs. Choosing the right company for your chosen profession can save you a lot of money over the life of the policy.
You can compare disability insurance quotes to quickly find the best price. Learn more about disability insurance cost.
Did you know that most disabilities are due to illness rather than injury? That's why it's important for people with white-collar jobs, like doctors, dentists, and lawyers, to have disability insurance. In fact, it's especially important for people in high-paying jobs that require an expensive educational investment. Most disability insurance companies will heavily weight your profession and may be more accommodating to workers in certain fields. Take this into account when deciding which insurer is right for you.
While short-term disability insurance isn’t the most cost-effective form of protection, it can still play a vital role under the right circumstances. Since long-term disability insurance policies can have a lengthy elimination period — the time before you actually receive disability benefits — a short-term policy can help fill that gap and ensure that you can continue paying bills in the interim.
However, most people receive short-term disability insurance through their workplace, meaning there are fewer options for private policies than with long-term insurance. Popular short-term disability insurance providers include:
Mutual of Omaha
Policygenius partners with LifePreserve to offer short-term disability policies to workers in the gig economy.
If your employer offers group disability coverage as a workplace benefit, it’s worth looking into, regardless of whether it’s long-term or short-term. These benefits are often subsidized or free, so there’s usually no reason to not take them.
However, a workplace disability policy shouldn’t be your only form of protection; at best, it should complement a private policy. That’s because:
The benefit amount may not be enough for your needs
It’s tied to your employment and doesn’t travel with you if you leave your job
You have limited options to customize your policy, and usually only one carrier to choose from
Colin Lalley is the Associate Director of SEO Content at Policygenius in New York City. His writing on insurance and personal finance has appeared on Betterment, Inc, Credit Sesame, and the Council for Disability Awareness.
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