Your guide to long-term disability insurance

Long-term disability insurance provides coverage for years or even decades.

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Nupur Gambhir

Nupur Gambhir

Senior Editor & Licensed Life Insurance Expert

Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

&Elissa Suh

Elissa Suh

Senior Editor & Disability Insurance Expert

Elissa Suh is a disability insurance expert and a former senior editor at Policygenius, where she also covered wills, trusts, and advance planning. Her work has appeared in MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.

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Maria Filindras

Maria Filindras

Financial Advisor

Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.

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Around one in four people will become disabled before they retire. [1] As you age, the chances of a disability due to an accident or illness only increase. But there's a way to make sure you have a safety net — disability insurance. Long-term disability insurance protects your paycheck, and by extension, your day-to-day life, if you can't work for an extended period of time — think years or even decades.

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What is disability insurance?

Disability insurance is a form of income protection that pays out a benefit if you can’t work because of an illness or injury. The level of income replacement you can get and how long your disability benefits last varies by your policy and what type of disability insurance you have.

What qualifies as a disability? 

All insurance policies include a definition of disability, which explains the conditions you must meet in order to qualify for a benefit payment under your specific plan. 

In most cases, you don’t need to be totally and permanently disabled to receive long-term disability insurance benefits. An injury or illness will qualify you for disability insurance benefits if you are either mentally or physically unable to complete your job, or if you have an impairment that substantially limits your ability to carry out basic life activities.

When you get disability coverage, the insurance company will further define your disability using the following terms:

  • Own-occupation disability means you can’t work at your regular job, even if you still might be able to work at another job.

  • Any-occupation disability means you can’t work any job.

→ Read more about what disability insurance covers

How long-term disability insurance works

Disability insurance pays out about 60% of your non-taxed income on a regular basis, just like a paycheck. Some people get long-term disability insurance as part of their employee benefits program, but it may not provide enough protection. Most people need their own long-term disability plan to get adequate coverage. 

You can figure out how much coverage you need with our disability insurance calculator.

The way long-term disability insurance works is that you pay premiums for a long-term plan, and when you become disabled, you’ll file a claim with details about your diagnosis and proof that you are unable to work. 

After the waiting period, you’ll begin to receive benefit payments. Disability insurance payments typically stop when you return to work, but you may be able to extend your coverage with a rider. 

If you want to get rid of your long-term disability coverage, you can always cancel your policy

Long-term disability insurance benefits

It takes about 90 days before you can start receiving long-term disability benefits, which can last until you retire — unlike short-term disability benefits, which pay up to a year. You can use disability insurance benefits the same way you use your income: to cover everyday expenses, pay regular bills, and keep up with your larger financial plan.

Your long-term disability benefits usually aren’t taxable (unlike short-term insurance benefits), and you don't have to pay them back. They’re also typically larger than disability benefits from Social Security, which is why an individual long-term policy is the best way to protect your income. 

→ Read more about how long disability insurance lasts 

Do you need long-term disability insurance?

If you can’t go years or months without a paycheck without depleting your savings, you need long-term disability insurance. 

Losing your income risks your ability to pay bills or support your family, which can lead to long-term financial consequences — 66.5% of all U.S. bankruptcies and more than 50% of all mortgage foreclosures stem from illness or injury-related medical issues. [2] And a disability is more likely than you think — over 25% of American workers become disabled before they retire, and on average the disability lasts more than three months at some point in their careers. 

Disability insurance isn’t just for people who work dangerous jobs. You can become disabled no matter what you do for work — the majority of long-term disabilities are due to an illness rather than an accident. And if you took out loans for your education, getting disability insurance prevents you from falling behind on those payments. 

Long-term disability insurance protects your most valuable asset — your ability to earn an income — and should be a part of every financial safety net.  Even if you have short-term coverage from an employer, consider combining it with a long-term policy for more complete coverage.

→ Read more about why long-term disability insurance is worth it

How to get disability insurance 

The application process takes about four to six weeks to complete. There are six steps to getting long-term disability coverage:

  1. Shop around and compare quotes from multiple insurers.

  2. Fill out the application paperwork.

  3. Have a phone interview about your lifestyle and medical history.

  4. Take the medical exam.

  5. Wait for an application decision.

  6. Sign your policy and make the first payment.

A licensed agent at Policygenius can help you get disability quotes and find a long-term policy that meets your needs.

How much does disability insurance cost?

You can generally expect to pay between 1% to 3% of your annual salary for a long-term disability policy. Costs are also affected by your occupation, and some disability insurance companies may offer better rates than others. Disabilities become more likely as you age, and rates will increase as you get older so it’s best to get a policy while you’re young. 

→ Learn more about the cost of long-term disability insurance

Frequently asked questions

What is long-term disability insurance?

Long-term disability insurance pays benefits until you retire if you become disabled and can’t work. You usually buy a LTD plan on your own, unlike short-term disability insurance, which you typically get through your employer.

Should you get disability insurance?

Yes. Long-term disability insurance can cover around 60% of your income and you'll generally spend 1% to 3% of your salary on premiums. Long-term disability plans provide the most protection.

What qualifies for a long-term disability?

A long-term disability lasts three months or longer. Whether or not you qualify for your policy’s definition of disability depends on if you purchased own-occupation disability insurance or any-occupation disability insurance.

When does long-term disability begin?

Long-term disability benefits begin after the elimination period, which is usually 90 days. Short-term disability benefits pay out immediately, but they don’t last as long.