Long-Term Disability Insurance: What is it and how can it help?

Disability insurance can help replace part of your income if you’re unable to work after an injury or illness. When short-term disability (STD) insurance isn’t enough, long-term disability insurance may be able to provide coverage depending on the disability and how long it may affect your life. Read on to learn how long-term disability insurance works, what it can cover, and how you can purchase a policy.

What is long-term disability insurance? 

Long-term disability (LTD) insurance is a policy that can replace a portion of your income after a qualifying injury or illness. The benefit is paid directly to you and you determine how best to use this income replacement. It can help you pay for expenses to maintain your standard of living when you’re unable to earn a paycheck over an extended period.

What does long-term disability insurance cover?

Covered diagnoses and exclusions can vary between providers and policies for long-term disability insurance. The severity of disabilities that are covered range from any injury or illness that impacts your ability to work . It’s important to note that long-term disability insurance often doesn’t cover pre-existing conditions.¹ While it likely won’t disqualify you from getting a new policy, any pre-existing conditions you have may not be covered under it.

Some examples of when you may be able to take advantage of long-term disability insurance include the following instances, where you may be unable to perform all aspects of your current job functions:

• An accident that causes a severe back injury
• Additional time needed to recover from surgery
• An injury that results in chronic pain or loss of limb
• A mental health condition requiring intensive outpatient or inpatient treatment
• A medical condition that severely reduces or impairs your motor function
• An illness that makes it extremely difficult to stay at work for the required time

How does long-term disability insurance work?

Just like most types of insurance, you enroll in a policy through your employer and may pay a premium to keep it active. When you experience a qualifying disability, you submit a claim to your insurance provider. This typically requires documentation from your doctor or a medical professional supporting your impairment.

If your disability claim is approved, you receive payments from your insurance provider that cover a portion of your income. To continue receiving benefits, you may have to regularly submit proof of your disability.

If your disability is work related, LTD insurance may cover it if you don’t have workers’ compensation benefits. If you do have workers’ comp benefits, you may be able to receive payouts from both. However, your LTD insurance provider may deduct what you receive from workers’ comp from your policy’s payout.² The details of your policy likely clarify this.

When do long-term disability benefits start?

If your claim is covered, you’ll likely have an elimination period . The elimination period is the time from your date of disability to your benefit start date. You will not receive benefits during this timeframe. The elimination period is dependent on your policy. Many times, your long-term disability elimination period runs concurrently with your short-term disability insurance, allowing for no gap in disabillity benefits.

How long do long-term disability claims last?

LTD insurance policies may provide coverage for the duration of your disability or until your Social Security retirement age. Some plans may have limited benefits for some conditions. Be sure to review your policy to determine your benefit duration.

While long-term disability insurance can provide coverage for extended periods of time, short-term disability insurance may be better for injuries and illnesses that last less than six months.

Own vs. any occupation coverage

LTD insurance policies may have two different definitions of disabilities: own occupation and any occupation. These two definitions are typically used in the same policy, but are applied to a claim at different time periods. Own occupation applies for the first 24 months of benefits, and any occupation applies thereafter.

With own occupation coverage, you can receive benefits if you’re unable to work in your own occupation. Own Occupation refers to work that an employee regularly performs and that serves as their source of income, but is not limited to the specific position an employee holds with their employer. It may be similar work that could be performed with the current employer or any other employer.

With any occupation, you can receive benefits if you’re unable to work in any occupation you are or could become qualified for, taking into account your training, education and experience.¹

Where can you get long-term disability insurance?

Some employers offer group long-term disability insurance as an employee benefit. You can usually enroll in a policy when you’re hired, during open enrollment, or during a special enrollment period if you experience a qualifying life event (QLE). Talk with your benefits administrator to see what plan options are available.

How much does coverage cost?

The cost of your coverage will depend on various factors — including your provider — but it may be more cost-effective than you might think. For example, with a MetLife Long Term Disability Insurance plan, a 35-year-old healthy male may get a $1,000 monthly benefit for an initial premium of about $25 per month. Use Metlife’s Disability Calculator to get an idea of how much benefit you might need.*

In general, group and individual LTD insurance policies typically cost around 1% to 3% of your yearly salary, but your exact cost may depend on factors like your age, health, income, level of coverage, and benefit term.³