You’ve decided to apply for disability insurance. But how long does long-term disability last? The answer will depend on the type of policy you have. Below, we discuss what to look for, like your policy’s elimination period and length of benefit period.
The elimination period, or waiting period, will determine how long you have to wait before you can receive benefits. You may have to wait 30, 60, or 90 days or the wait period could be 6 months to a year.
The benefit period is the length of time your insurance company will pay you disability benefits. You choose the length of time you’ll receive benefits when purchasing your policy. You can decide if you want coverage for two years, five or ten years, or even until retirement.
The key to choosing the length of your benefit period depends on your financial situation, what other types of insurance you have, and how much you can afford to pay for monthly premiums.
The choice of elimination period will determine the start and end of your disability benefits. Insurance companies won’t pay long-term disability benefits if you are already receiving short-term disability benefits. Check your policy for this information to avoid any unpleasant surprises.
Your disability must continue throughout the elimination period and will serve as proof of a long-term disability. The elimination period you select will affect the amount of money you pay for your premiums and depends on the length of time you can go without receiving income between the end of your short-term policy and the beginning of your long-term benefits.
If you need income to pay expenses immediately, for example, if you do not have any savings to use, you can opt for a short elimination period. However, your insurance premiums will be higher so think about how much you can pay on a monthly basis.
A 90 day elimination period is a popular choice to lower premium payments. If you have a healthy savings account or have other income to cover the elimination period, a long time before benefits begin will lower your monthly premium.
Think about the source of your income during this time. Credit cards or loans may cause budget problems later. Many personal finance experts recommend having an emergency fund equal to at least 3 months of living expenses or a year if that’s possible. A short-term disability policy can also provide financial security before your long-term benefits kick in.
Please note, depending on when your policy was approved, your disability insurance may not begin paying benefits until the end of the month.
The benefit period is the length of time you can receive disability benefits once the elimination period is over. This decision may be the most important one you make when applying for a long-term disability insurance policy.
Long-term disability policies may pay benefits for two, five to 10 years or until retirement. Five-year disability coverage is sufficient for most people. According to disability experts, the average long-term disability benefits are paid out for just about 3 years.
If you want to ensure you can receive benefits until retirement, surprisingly the benefits for such a policy are not much more than for a five-year policy. It will give you the security of knowing you have a steady source of income if your disability lasts longer than the average 3 years.
A good rule of thumb for deciding to purchase until retirement disability insurance policy is to consider your profession. If your occupation requires very specific skills, such as those of a doctor or surgeon, a dentist, or a nurse, for example, a long-term disability policy may protect you in the event you are unable to use those specific skills.
Another consideration is the amount of debt associated with your education or training such as a doctor, lawyer, or similar professions. An until retirement insurance policy will ensure you’re able to pay off your student loans in addition to covering your regular living expenses.
Whichever policy you choose, be sure you understand the terms of the policy and whether or not they’re right for your needs.
If you have questions about your policy, or need help with a long-term disability claim, speak to an attorney at CJ Henry Law Firm PLLC today.