What is Long-Term Disability Insurance and How Does it Work?

What is long-term disability insurance?

Long-term disability insurance is an insurance policy that helps supplement part of your income if you are sick or injured and unable to work for a long period of time. Generally, it functions like any other insurance policy: you’re eligible for benefits as long as you pay your monthly premium, and when you have a qualifying sickness or injury that prevents you from working, you can submit a claim to help replace some of your lost income. Typically, you’ll have to show medical documentation to support your claim .

Here’s how a typical long-term disability insurance plan works:

• If your disability claim is approved, you’ll receive payments from your insurance provider to help supplement up to 60% of your income.¹
• To continue receiving benefits, you must regularly submit proof of disability.
• If your disability is work-related, you may be able to receive both long-term disability and workers’ compensation benefits. (Some insurers deduct workers’ comp from the policy payout, however, so make sure to clarify the policy details.)

What does long-term disability insurance cover?

Insurance providers and policies vary with coverage, but usually, qualifying disabilities are ones that are severe enough that they impact your ability to work. Long-term disability insurance usually does not provide benefits for pre-existing conditions. Most policies have an elimination period during this time you can’t submit a claim.² Pre-existing conditions likely won’t disqualify you from applying for a policy, but the policy may not cover that specific condition.

Some of the most common conditions long-term disability offers coverage for include:^1,2

• Severe back injuries or musculoskeletal diseases
• A condition that results in vision loss
• Mental health conditions requiring intensive treatment
• Nerve impairment due to a medical condition that limits finger mobility
• Cancer
• Stroke

It’s important to always read the details of your policy, as you may require supplemental insurance (additional coverage for expenses your primary insurance doesn’t cover), like cancer insurance or accident insurance, to get more comprehensive coverage.

How long do long-term disability benefits last?

Generally speaking, long-term disability insurance can provide benefits for qualifying injuries and illnesses that last several years or through the end of your life. But policies vary significantly, and there may be coverage limits, benefit duration limits, waiting periods and other factors to consider. Long-term disability benefits may be available in a few different ways:

• Benefits for the duration of your disability.
• Benefits for a set term.
• Benefits until your Social Security retirement age.
• Limited benefits for certain conditions.

Depending on your policy, you could get long-term disability payments until you’re eligible to receive Social Security, you get better, or until the policy expires or reaches its limit. To continue getting benefits, you’ll typically have to show documentation from your doctor or medical professional to prove medical eligibility. In most cases, you’ll have to wait through an elimination period before you’re eligible to make a claim.