Long Term Disability Guide
What is it, how expensive is it,
and do I need it?
Long Term Disability Testimonial
...I also use them for a variety of insurance products and other financial planning needs.
Whether you’re looking for a group to help with your business goals or personal financial planning I would highly recommend Langan.
What is Long-Term Disability?
Long-term disability, also known as disability income insurance, is a type of insurance policy used to supplement income.
It provides you and your family with income protection in the case you become unable to work because of an accident, illness, or injury.
What is the Difference Between Long-Term and Short-Term Disability?
The three biggest differences between short-term vs. long-term disability insurance policies are:
1. Disability Income Insurance Coverage Period
Depending on your long-term disability insurance policy, its benefits can last either:
- 2 years
- 5 years
- 10 years
- Until retirement
- Throughout retirement
Whereas, short-term disability insurance does not last nearly that long. At most short-term disability will last two years, but it is more common to last between 3 to 6 months.
2. Disability Insurance Level of Coverage
3. Waiting Period to Collect Benefits
The waiting period for short-term disability is much shorter than for long-term disability. Short-term disability is usually under 14 days, whereas long-term disability waiting period is typically 90 days.
What is the Benefit of Long-Term Disability Insurance?
The biggest benefit of long-term disability insurance is to provide protection in case you lose your income due to:
- Injury
- Illness
- Disability
Do I Need Long-Term Disability Insurance?
No one ever wants to need long-term disability insurance and in some cases, people think they are more protected than they actually are.
While worker's compensation can provide some protection, it only provides income away from work if the issue was directly work-related.
According to a 2019 LIMRA study, less than 1% of American workers missed work because of a work-related illness or injury.
In addition, according to the Social Security Administration, more than one in four 20-year-olds can expect to be out of work for at least a year because of a disability condition before they reach normal retirement age.
We always think it will not be us, but the point of insurance is to provide protection just in case.
Consider looking into long-term disability to see what the costs are and the coverage options available.
Take time to meet with an insurance agent to review your options and cost. It does not cost anything to get quotes and review your options.
What are the Most Common Reasons for Long-Term Disability Claims?
According to LIMRA's 2020 - 2021 Insurance Barometer study, the following are the most common reasons for long-term disability claims:
- Musculoskeletal disorders (27.6%)
- Cancer (15%)
- Injuries such as fractures, sprains, and muscle issues (12%)
- Mental health issues (9.3%)
- Circulatory (such as heart attack, stroke) (8.2%)
How Much Does Long-Term Disability Pay?
Long-term disability insurance's payout depends on your policy's coverage. It can pay out between 40% to 80% of your "pre-disability earnings".
Pre-disability earnings are your monthly compensation from your job before you became disabled. Depending on the policy's structure, it may take into consideration bonuses, commissions, and overtime.
However, all long-term disability policies have a maximum monthly payment. This can range from $4,000 per month up to $25,000 a month, depending on the policy.
In addition, depending on your policy, there may be a Cost of Living Adjustment, also known as COLA.
A COLA adjustment can increase your benefits each year of your policy to reflect inflation based on the Consumer Price Index. Typically, a COLA adjustment can range from 1% to 3%.
When Does Long-Term Disability Start?
Long-term disability starts when the insurance company agrees you meet their definition of disability defined in the policy. The waiting period can range from 90 to 180 days before receiving benefits.
When the long-term disability insurance provider is reviewing your file to determine your long-term disability eligibility, the provider will review your long-term disability policy's definition of disability.
The insurance provider will compare the policy's disability definition with your current situation to determine if you meet the requirements.
How Long Does Long-Term Disability Last?
Long-term disability insurance's payout will last either until you recover from your disability or you reach retirement age.
Is Long-Term Disability Taxable?
Typically, long-term disability income is not taxable, but there are situations in which it is.
If the disability insurance premiums are paid with after-tax dollars, then your long-term disability benefits are not taxed.
However, if your employer is paying for your long-term disability policy, it may be taxable.
Long-Term Disability Insurance Agent
Working with a local Insurance Agent is an important decision that can impact not only your future but your family.
When deciding what insurance agent to work with, be sure the company is an independent agency that does not require specific quotas or products for their advisors to sell or meet.
You want an advisor that can understand your needs and find a product that meets your requirements. not encourage a suboptimal product.
When it comes to insurance, there is no one product that fits all. Each person's case should be discussed to understand:
- What is your situation?
- What are your goals?
- What are your obstacles?
- What plan aligns best to overcome your obstacles and achieve your goals?
Talk to Langan Financial Group's insurance agents to help assess your needs. We are more than happy to review current policies, discuss your concerns, and answer any questions you may have about disability insurance.
Get started today
Contact Us Today
Schedule a Chat with a Long Term Disability Insurance Agent
Langan Financial Group's insurance agents have over 100 years of experience servicing insurance policies for individuals and families.
Give us a call at 717-288-1880 to see how our local agents can help with your insurance policy needs. Or visit our long term disability agent contact page to fill out an inquiry.
FREE Benchmark Comparison Services
Financial Advisor Locations:
Camp Hill, PA Financial Planning Office
York, Pa Financial Planning Office
Harrisburg, PA Financial Planners
Communities Served:
Langan Financial Group, LLC ("Langan Financial Group" or "LFG") is an SEC registered investment adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. LFG may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements.
Important information about our firm is on our Disclosures page. You can review our registration and disciplinary history on the SEC's Investment Adviser Public Disclosure (IAPD) website and, for brokerage registrations, on FINRA's BrokerCheck. This website is for general information only. It is not legal, accounting, or tax advice. Please talk with your own legal or tax professional about your situation. Important information about our firm is on our Disclosures page.
You can review our registration and disciplinary history on the SEC's Investment Adviser Public Disclosure (IAPD), website and, for brokerage registrations, on FINRA's BrokerCheck.
This website is for general information only. It is not legal, professional about your situation.
© Langan Financial Group
Harrisburg, PA Office
Address: 1863 Center St, Camp Hill, Pa 17011
Phone: 717-288-1880
York, PA Office
Address: 3405 Board Rd, Suite 200, York, Pa 17406
Phone: 717-773-4085
