Disability insurance is an important tool in a person’s finance arsenal that often goes ignored. Building a solid emergency fund is a good start. Still, it will only carry you so far if you become disabled and can’t work for some time, maybe permanently.
Most people rely on disability insurance from their employer, but what happens if your injury doesn’t occur on the job? Are you still covered? What if you lose your job and get hurt before you can find another one? Some companies like Gerber Life Insurance call this accident protection insurance.
Scenarios like this one are why you should consider disability coverage outside of your job. This article will cover the basics of disability insurance and the best disability insurance companies.
Table of Contents
- Top Disability Insurance Companies
- What to Look for with Disability Insurance
- What Does Disability Insurance Cover?
- Types of Disability Insurance
- How Much Disability Insurance Do You Need?
- Other Disability Insurance Options
Top Disability Insurance Companies
According to The Centers for Disease Control and Prevention (CDC), 61 million adults in the U.S. live with a disability. An unexpected trauma, an accident or an illness can affect you, limiting your ability to work and support yourself and your family.
Disability can hit you at any time and any age. The Social Security Administration says that a 20-year-old has a 25 percent chance of becoming disabled before reaching retirement age. This sobering fact puts in perspective that no one is immune to disability.
The first step in getting disability coverage is learning more about your options. Here are some of the best disability companies that can help you find the right coverage for your situation.
Assurity offers both short-term and long-term disability options, which can protect you if you suddenly can’t work. It provides a stream of monthly cash to help replace a portion of your wages due to injury or illness.
The company offers flexible coverage, including the option to get benefits in as little as 30 days. You can choose how long you will receive benefits. The length ranges between a year to retirement age.
If your injury allows you to work but not at your regular job, Assurity will pay you benefits for up to two years. You can also receive partial benefits if you return to work on a part-time basis because of your disability.
2. Guardian Life
Guardian Life has disability plan coverage you can get through your employer or individually. If you aren’t covered through work, individual disability coverage can be a great option that stays with you even when you change jobs.
The company offers short-term and long-term disability insurance options. Short-term disability pays you a portion of your income right after an accident or illness that prevents you from working.
Once short-term insurance benefits run out, Guardian’s long-term insurance option continues to pay you monthly if you’re still unable to work.
If you want an extra layer of coverage, Guardian offers supplemental disability insurance. This coverage is in addition to an existing long-term or individual disability plan.
Founded in 1851, MassMutual says its goal is to help people protect their loved ones and secure their future. As a mutual company, there are no shareholders. Policy owners and members share ownership and can vote for the company’s board of directors.
The company offers both short-term and long-term disability coverage with varying waiting periods and benefit length. You can also receive benefits if you can’t perform your particular occupation, even if you can do other jobs.
Check out MassMutual’s Disability Income Protection Insurance Calculator to find out how much disability insurance you need to cover your living expenses. The company offers customizable coverage that allows you to tailor your policy to your individual needs and potential income gaps.
4. Mutual of Omaha
Mutual of Omaha provides several disability benefits and riders to help you find the right coverage for you.
One option is a total disability income benefit. It will continue to pay you monthly if you’re unable to perform the duties of your regular job for the first 24 months. Afterward, there is the possibility of a continuation of payments depending on the severity of your disability.
The proportionate disability benefit will cover a percentage of the total disability monthly benefit in proportion to your loss of income for up to 24 months.
Other features include guaranteed renewal up to age 67, with no lapse in premium payments. The policy can be extended until age 75 if you continue to work full time and pay premiums on time. Mutual of Omaha also offers a terminal illness benefit, a rehabilitation benefit and a survivor benefit.
In addition to the benefits above, you can add on riders to your policy for an additional monthly charge.
These include a future insurability option, cost-of-living adjustment rider and a critical illness benefit rider. Besides, there is a hospital confinement indemnity benefits rider, accidental medical expense benefit rider and return of premium benefit rider.
5. Illinois Mutual
Even though Illinois Mutual was established in Illinois more than 100 years ago, the company offers insurance benefits across the U.S. Their Personal Paycheck Power® disability policy option covers basic monthly living expenses if you become sick, hurt or totally disabled.
This benefit can help cover expenses such as car and mortgage payments, rent, utilities, child care, groceries and more. As long as you pay your monthly premiums, your policy cannot be canceled until age 67.
Even if you qualify for Social Security or workers’ compensation, the Personal Paycheck Power program will pay you additional benefits.
Personal Paycheck Power insurance can be combined with individual accident insurance, which covers you when the unexpected happens. Optional riders include return of premium, retroactive injury benefit and guaranteed insurability option.
Illinois Mutual offers a disability insurance option for business owners to help protect their business and income. This can give business owners peace of mind as it can help pay business expenses and personal bills when combined with a personal disability policy.
6. Fidelity Security
Boasting 12 million policyholders, Fidelity Risk offers both disability and life insurance. The company provides both standard and niche products, which can help you find the right fit. Policy options include disability income and substandard disability.
If you have a high-risk profile, Fidelity Risk could be an option where other carriers may turn you down. The company can help you find the right policy that has the features, benefits and pricing that fits your individual needs.
Principal disability insurance has you covered when the unexpected happens. It can help you pay your bills if you have an accident, severe fall or back injury. You’ll also have coverage if you experience disability because of long-term illness such as stroke, Parkinson’s disease and cancer.
The insurance option from Principal will help you pay your regular expenses such as food, housing and childcare as well as insurance such as auto, life, health and home.
You can also get a Retirement Savings Protection policy, which will help you continue saving for your retirement goals even when you can’t work.
Policy options include both an individual plan and one offered by your employer. The advantage of the individual plan is that you don’t lose coverage when you leave your employer.
8. The Standard
The Standard offers both short-term and long-term disability options. If you miss work because of a covered disability, the company will pay you part of your income. You can get an individual policy or one through your employer.
Short-term disability coverage can pay you a monthly benefit during maternity leave while you’re recovering from giving birth.
The Standard also offers a family care benefit. It can lessen the financial impact when you take time off to care for a spouse, child or parent with a serious health condition. The policy kicks in if you lose at least 20 percent or more of your income.
The company offers other features such as guaranteed renewability and a rehabilitation benefit. Besides, you can add an automatic increase benefit rider to cover the cost of a rehab program.
There’s also a student loan rider to help with student loan payments and a survivor option to pay out benefits to a loved one.
While Aflac may bring to mind the duck that is part of its branding, the company offers solid options for short-term disability insurance.
Plus, you can get individual policies to cover accidents, disability and expenses due to cancer, and critical illness insurance, which covers you in the case of a serious injury or diagnosis.
Unlike other disability insurance companies, Aflac has the option of no medical questions for select products in some states. Your policy is guaranteed to be renewable up to age 75 if you meet all conditions.
You can also add on a value rider that guarantees a payout of up to $1,000 for every five years that you keep the policy.
Breeze aims to simplify the process of applying and getting approved for disability insurance. You can complete the entire application online in less than 15 minutes with no paperwork and no pressure from sales professionals.
Policy options are available to applicants between 18 and 60 years of age. You can choose from a variety of waiting periods from as little as 30 days to as long as 365 days before the policy pays out.
Pick your monthly benefit amount between $500 and $20,000. Your policy is guaranteed renewable until age 65 (or 67 in select cases). Policy built-in features include partial disability, presumptive (possible) disability, home modification, survivor benefit, vocational rehab and organ donor benefit.
You can add on riders to your disability policy for automatic benefit increase, non-cancelable feature and own occupation provision. Other riders that are available include catastrophic disability, critical illness, guaranteed insurability and supplemental disability insurance.
What to Look for with Disability Insurance
When researching disability insurance, it’s important to find the company and policy that works best for your situation. If you already have employer-provided coverage, you may want to supplement it rather than purchasing an individual policy.
If you have a job that is physically demanding, you may need different coverage than someone who sits at a desk all day. The goal of getting disability coverage is to protect yourself and your family for the worst-case scenario where you can’t earn income.
Before picking an insurer for your policy, check out the ratings from the Better Business Bureau to see what complaints have been filed. Check out reviews for each company on your list and what complaints people report when filing a claim.
You should get multiple quotes and decide if you want a short-term policy, long-term coverage or both.
What Does Disability Insurance Cover?
If something happens to you and you won’t get your paycheck for a while, how will you pay your bills? Disability insurance can help cover your monthly bills if you get seriously ill or injured and can no longer perform your job duties.
While no one plans to become disabled, it’s a real possibility that you may become temporarily or permanently disabled and can’t pay your bills.
Some people get disability insurance through an employer. However, if you switch companies or lose your job, you will also lose your disability coverage.
How much you receive each month and for how long will depend on the insurance and policy you purchase. Some policies will pay you a monthly benefit if you’re unable to return to your previous job.
In contrast, others will only pay out if you’re unable to perform any job you are qualified for based on education, ability and experience.
It’s always important to do your research and read the fine print when purchasing an insurance product. Most policies are not designed to replace your entire paycheck but rather pay you a portion of how much you made before becoming disabled.
Types of Disability Insurance
There are two main types of disability insurance – short term and long term. You may be able to purchase specific products such as critical illness or accident coverage. However, each of these falls into either the long-term or short-term disability insurance umbrella.
- Short-term disability insurance (STDI) – STDI coverage will help cover part of your expenses if you’re unable to work for a short period due to a disability. Most STDI policies will only pay out for up to two years of disability benefits. Many employers offer this as a benefit. Some STDI policies can help you pay for your loss of income while you’re recovering from maternity leave.
- Long-term disability insurance (LTDI) – LTDI benefits can help cover part of your expenses if you become disabled for a minimum of two years up until you retire. You can purchase a LTDI policy individually or check if your employer provides it. LTDI policies will not replace your entire paycheck, and many have provisions that may require you to find a job outside of your desired field.
- Social Security Disability Insurance (SSDI) – SSDI is a federal program that offers income help to people with disabilities. It’s available to those who worked long enough and paid sufficient Social Security taxes to qualify for the benefit. You will need to meet specific eligibility requirements before qualifying for benefits. However, there is no additional cost to the SSDI program, unlike private insurance policies.
How Much Disability Insurance Do You Need?
There is no one answer to how much disability insurance you will need to purchase. The policy you buy will depend on your income, expenses and number of dependents.
Another factor to consider would be the size of your emergency fund. Plus, you should evaluate any passive income you may have that could help cover your bills outside of a paycheck.
You should buy a policy that will be sufficient to help you cover your essential bills if you’re unable to work. For most people, this translates to at least 50 percent of their income.
If you have an emergency fund with at least six months of living expenses, the right disability policy can help you extend that money to cover a longer period.
Some disability companies offer a calculator on their site to help you determine how much coverage to get.
Also, add up all of your essential bills such as mortgage or rent, insurance, utilities, groceries, etc. to get a ballpark of how much you need each month to keep up with your obligations.
Other Disability Insurance Options
Some companies offer short-term or long-term disability coverage to employees. This coverage can be paid for or provided at an additional cost.
Since employers can purchase group policies, you can generally get cheaper coverage this way than if you buy an individual policy. Also, you may also be able to use payroll deduction to pay your premiums, which can be convenient.
Other options for getting a discount on disability insurance is going through a professional association for your occupation. Some well-known organizations that offer disability insurance coverage to members include the American Dental Association, the American Bar Association and the Freelancers Union.
While no one plans on needing disability insurance, it can be one of the most useful types of coverage. It can help you pay your bills if you find yourself out of work due to an unexpected illness or injury.
Do your research and carefully read the fine print when purchasing an insurance product. Note that most policies are not designed to replace your entire paycheck but rather pay you a portion of how much you made before becoming disabled.
Do you have a disability insurance policy? If you do, does your employer pay for it, or did you need to buy an individual policy? If you don’t have one, why not?