The 5 best disability insurance policies of 2021
What is disability insurance?
If you’re injured or get sick and can’t work, disability insurance can help with monthly benefits to cover things like groceries, car payments, and even the mortgage. Unlike workers’ compensation insurance, disability insurance covers illnesses and injuries that are not related to work.
Disability insurance coverage can be short or long term and can be purchased at the workplace or individually. If something does happen and you have to use this coverage down the line, the benefits received would be considered non-taxable.
Short-term or long-term disability insurance
When many people think of the word “disabled” they think of a permanent or debilitating problem, maybe even a problem that would prevent you from working again. However, an unexpected disability can take many forms and is often temporary in nature.
Short-term disability insurance is intended to cover temporary illnesses, injuries and conditions that would prevent you from working or working at your usual pace for a short period of time, but which are not permanent. Short-term disability insurance can also protect your income while you wait for long-term coverage to take effect if a condition is more permanent in nature.
While short-term disability benefits can last up to two years, many will only cover you for three to six months. The following are examples of conditions that could be covered by a short-term disability insurance policy:
- Pregnancy and childbirth
- Injuries such as a broken leg or back
- Joint problems
- Mental health or nervous system problems
- Organ donation
Short-term benefits often have waiting periods of 14 days or less before going into effect, police say, although some have no waiting period at all.
Then there is long term disability insurance. This coverage is designed to help you replace your income for a longer period if your injury, illness or condition lasts longer.
These policies have a longer waiting period, ranging from one month to two years before coverage takes effect, but benefits typically last between two and 10 years. Depending on the policy you purchase, coverage may even be available until retirement age (65 to 67).
Depending on the policy, your long-term disability insurance could cover things like:
- Injuries resulting from a fall, car accident, etc.
- Musculoskeletal diseases
- Mental health problems
What is not covered by disability insurance?
Disability insurance coverage has its limitations and does not cover all situations. For example, disability insurance will not cover long-term care needs; for this you would need to purchase a long term care insurance policy.
Disability insurance also does not usually cover your actual medical care, even if illness or injury qualifies you for disability coverage. Instead, you would use your existing health insurance policy to pay said medical bills.
If you have any pre-existing conditions, you may have difficulty getting approval for disability insurance. This is especially true when shopping for individual short term policies. Pre-existing exclusions include things like pregnancy, chronic disease, or even diabetes.
What is the best type of disability insurance?
The best type of disability insurance is the one that best meets your personal needs. Policies are offered to individuals or as group plans through an employer. Coverage options are short or long term, and both are useful depending on whether your illness or injury is temporary or not.
If you already have a long-term group policy at your workplace, it may be a good idea to add additional or individual short-term coverage yourself. This will help bridge the gap between when your disability occurs and when your existing coverage kicks in, and may also provide other benefits such as student loan repayment protection.
How to choose disability insurance?
There are many factors to consider when choosing a disability insurer. If your employer offers a short-term or long-term group disability insurance option, this may be an affordable option to consider. Of course, you can also take out individual and / or complementary coverage on top of that, to better protect yourself and your income.
When choosing a disability insurance policy, you’ll want to consider the elimination period options, the coverages available, the endorsements available, and whether the policy is non-cancellable. In some cases, you may also want to determine if a medical exam will be required and if you can purchase coverage online or if you will need to speak with an agent.
How much does disability insurance cost?
As with any insurance policy, the cost of disability insurance policies will vary considerably depending on the type of coverage purchased, the benefits chosen, your age, your income, your occupational risk category and even the waiting period. selected.
In our research, we found that monthly disability insurance coverage of $ 5,000 for a 35-year-old woman could range from $ 95 to $ 290 per month. Your own experience, based on your own preferences and personal information, may differ.
How we choose the best disability insurance
We compared over 15 disability insurers before choosing the best for each category. In doing so, we compared not only the products offered, but also the prices, the ease of getting a quote and then purchasing coverage, the benefit options and how quickly the coverage would take effect (withdrawal period). .
Of course, it was also important to choose insurers with a solid track record of claims satisfaction, reliable coverage and financial stability. We looked at data from the NAIC, BBB, and AM Best in this analysis.