Long-term disability insurance protects your income and finances in case of an injury or disability that renders you unable to work. If you are wondering how long can you stay on long term disability insurance, the short answer is that it depends mainly on your policy. Depending on the policy type you have, you can receive benefits for months, years, or even decades.
How Long Can You Stay on Long Term Disability
Unlike most insurance products, long-term disability insurance pays out benefits not as a lump sum, but on a monthly basis. Let’s see how this type of insurance works.
How Long-term Disability Benefits Work
When filing a long-term disability insurance claim, your policy will depend on what you opted for when applying for your policy at the time of application. You will need to know what riders and features are available to you, then decide on the length of your elimination and benefit periods. But what are these riders and features?
1. Elimination Period
Also called the waiting period, the elimination period is the time you have to wait, following a disabling event, before you start receiving your monthly payouts. It can be 30, 60, 90, 180 days, or even up to one year. Many start with 90 days, as three months is what one would have to wait before benefits would kick in. Choosing the length highly depends on how much is in their emergency savings and how much debt they carry.
2. Benefit Period
The benefit period refers to how long you will receive benefits. You can opt for a plan that has coverage through retirement age or if you prefer to cover a shorter time frame, some select 5 or 10 year benefit periods.
Choosing the Right Length of Elimination Period
You won’t receive benefits until your elimination period is met, so it is important to consider your overall financial situation. Also, in order to be eligible for benefits, your disabling event still needs to be present after you fulfill the entire waiting period. This way, your insurer can see that your disability is really long-term and your claim is relevant.
You will choose your elimination period when you apply for long-term disability insurance. Wondering what the right length is for you? Typically, this depends on what you are looking to spend and if you could wait longer than 3 months before receiving your benefits following a disabling event.
Before choosing the length of your elimination and benefit periods, it helps to look at your current and future financial situation, plus do a review any other insurance products you have. You can contact your advisor to do an overall review of all policies to help you make this decision.
Shorter Waiting Period
● Advantage: You start receiving benefits quickly to cover your expenses.
● Disadvantage: You pay higher premiums for a shorter elimination period.
Longer Waiting Period
● Advantage: You pay lower premium rates.
● Disadvantage: This won’t work if you have a lot of expenses and the only thing you are relying on is your income.
Choosing the Right Length of the Benefit Period
When it comes to insurance planning, one of the most important decisions you will make when getting long-term disability insurance is the length of your benefit period. Please note: Some who have adverse medical history will only be allowed to have 2 or 5 year benefit periods.
Is “Until Retirement” Right for Me?
Maybe you have asked yourself this question before. A benefit period that lasts until retirement age is particularly great for specific specialty professions, such as those in the medical field where professionals work with and rely on their skill sets. Long-term disability insurance would pay them benefits until retirement age as a safeguard should a disability prevent them from using their skills to earn a living and fund their retirement goals.
How Long Does Private Long Term Disability Last?
It depends on your policy. Having a private, individual long-term disability insurance policy is generally better than employer-based group policies; as the private plan allows you to tailor it to your needs and preferences. The latter typically provides benefits for two to three years and is typically not specialty specific. On the other hand, short-term disability coverage lasts usually between three to six months.
Can my Employer Cancel my Health Insurance While on Long Term Disability?
No. Under your leave terms, your employer cannot cancel your health insurance while you are on long-term disability and cannot perform your job.
How long can you stay on long term disability mainly depends on the policy you have – you may receive benefits for months, years, or even until retirement. Before getting long term disability insurance, you need to decide on your elimination period and benefit period. Prior to choosing the right length of both periods for your policy, it is important that you consider your current and future financial situation and how this policy works along with any other insurance products. When it comes to disability insurance, our team here at Crisp Physician Solutions is prepared to help you find the best plan for your needs.