Last Updated: September 2020
Disability coverage is one of the least understood insurances on the market. Most people think that they don’t need it because workman’s compensation covers them. They’re right, partially.
Workman’s compensation could help to cover some of the costs, but what happens if you are out to lunch and get hit by a bus?
Or if you’re in an accident while on your way to work?
Or you have a heart attack?
You weren’t injured at work, so workman’s compensation doesn’t even come into it.
Even if it does happen at work, could you live off your current salary for the rest of your life?
That’s why a lot of companies offer short-term disability coverage to employees as a perk.
Below, we’re going to focus on the long-term plans, looking at the top providers of disability insurance.
The Difference Between Long Term and Short-Term Disability Insurance
Here’s a quick breakdown of disability insurance.
- Short-term disability insurance is, as you might guess, a stop-gap measure. It’s meant to cover you until you can start work again. It doesn’t typically extend past a year at the very most.
- That’s when long-term disability insurance kicks in. Long-term insurance is more expensive, but the coverage is also more extensive.
This coverage will pay out for a set number of years, or until you retire. So, if you’re twenty and something happens, you’re covered until you are due to retire.
The Top 10 Best Companies for Disability Insurance
Assurity takes disability insurance to the next level. It’s one of the leading insurers in this area. It is also one of the few companies that cover the self-employed. They offer policies for individuals and group insurance as well.
They have done everything possible to ensure that their policies are as straightforward as they can make them. You can choose the Simplified Income Insurance Plan to get coverage as fast as possible.
You don’t even need to have a physical done. They’ll interview you over the phone and confirm further details by checking the prescription database and running a MIB search.
So, while it seems extremely easy, it’s difficult to fudge the lines here. The minimum entry age is 18, and the maximum entry age is 59. You’ll receive coverage not exceeding $3,000 a month.
This is a company with a long history in the insurance world. Founded in 1960, Guardian Life has been awarded top marks from both the Better Business Bureau (BBB) and A.M. Best. They’re a multi-national firm and have 58 agencies in the United States alone.
Their disability insurance is offered by a subsidiary of Guardian, the Berkshire Life Insurance Company.
You can choose between four different plans:
- Individual coverage
- Group coverage
- Coverage for those who are self-employed
- Supplementary coverage
Their long-term insurance ranges will pay out between two and ten years and remain in force until you turn 67. The advantage of this plan is that you can claim as long as you are unable to perform the job you have. So, even if you can do other work, you can still claim.
Illinois Mutual is a less-known company, but it is over a century old with more than 1,000 agents nationwide. You can choose to cover your full expenses monthly or any shortfall that Social Security doesn’t.
They guarantee that you can renew your policy until you reach the age of 67, which means that your policy can only be canceled due to non-payment.
Illinois Mutual does have a Business Expense plan aimed at the self-employed as well. This will give you enough money to help keep your business running smoothly if you can’t run it anymore.
PIU (Petersen International Underwriters)
This company is another little-known gem.
The idea for PIU came about after a young Peterson saw his father struggling with a disability that left him unable to work. The family battled to make ends meet, and Peterson wanted to spare others the same fate.
PIU is great if you’re earning a big-figure salary. Their payouts are higher than most of the other companies on our list.
It’s more of a specialist company now for high-end earners, but it offers excellent service. Even those with existing health conditions can apply for coverage here.
We do have to add in a disclaimer: the rates are higher than most other companies we’ve covered. The upside is that this company accepts applicants that most others will not.
MassMutual is another well-established firm. It was founded in 1851 and holds top ratings from the BBB and A.M. Best. The maximum entry age is seventy. You can opt for payout periods ranging from two years to ten years.
You will want to check the elimination periods before signing up. These can range from 60 days up to almost two years.
The elimination period is how long you need to wait for benefits to kick in. In other words, you will have to wait at least two months before you start receiving your first payment.
This is another company that will pay out as long as you can’t carry on in your current profession, which means that even if you can work in another field, you can still get claim approval.
What makes this plan unique, though, is that there is a recurring disability benefit. Should you end up disabled as a result of an earlier claimed event, you don’t have to wait through the elimination period.
Mutual of Omaha
This company has received acclaim from many sources and has been profiled by several leading sites a few times over.
Mutual of Omaha offers unique benefits in terms of customization. You can take the standard plans and add riders to give you the exact amount of coverage you want.
All their long-term plans have the following basic features:
- Total disability coverage with an income benefit
- Waiver of premium can be added as a rider
- Proportionate disability coverage
- Guaranteed to be renewed until you turn 67. So, as long as you keep up with the premiums, you’ll have coverage.
- If you are still working full-time when you turn 68, you can apply for extended coverage. After this extension, you are covered until you turn 75.
There is also coverage for terminal illnesses, rehabilitation, and survivors. Some of the add-ons include:
- Cost-of-living increases
- Return of your premiums
Ohio National is about as solid as they get. They received top ratings with the S&P, BBB, and A.M. Best. They’re known for their outstanding customer service.
They offer a few different options. One of the most popular is the ContinuOn plan. This plan:
- is available to anyone between 18 and 70
- can’t be canceled by Ohio National and will be renewed as long as you pay the premiums
- has an elimination period between 60 to 365 days
- offers insurance for a maximum of $30,000 in income
- provides residual coverage as well that pays out if you can work and so can’t claim full disability
- is unique in that they have a special condition for those in hospice care—they’ll waive the elimination period if you are receiving hospice benefits
Principal Financial Group
Principal Financial Group is another company with a long-standing history. They were founded in 1879, so they have plenty of experience in the industry.
They’ve also received a few awards, such as the Advisor’s Choice Award. You can choose to cover yourself or opt for a group plan.
The company is unique in that it will cover those who are employed part-time. There are not many other companies that are quite as lenient. The plans are simple to understand, and you can simplify the application process by choosing a benefit limit of no more than $6,000 monthly.
Should you want more, you can get it, but you’ll need to undergo the full application process. This may mean having a complete medical exam done. The company offers highly-competitive rates and some excellent benefits.
This company ranks highly because of the excellent service they offer. There are three standard plans:
- The Platinum Advantage
- The Protector Platinum
- The Protector Essential
The Platinum Advantage plan is the most expensive, but it includes some impressive benefits and riders at no extra cost. The one we’re most excited about is the Family Care Benefit, though.
If someone in your family needs round the clock care, and you can’t work as a result, this benefit kicks in. It provides one-fifth of your income. This benefit is unique to The Standard.
You can also choose an automatic increase in benefits of 4 percent by adding on the appropriate rider. If you decide that you need more coverage within three years of starting your policy, you can get it without needing to endure the underwriting process again.
Ameritas traces its roots back to 1887. The company since merged with two others and became the giant that we recognize today.
There are two options when it comes to the plans that Ameritas offers:
- The DInamic Foundation: This plan has a lot of useful features. It includes a medical benefit if you’re injured, but not enough to be considered disabled. You’ll get your premiums back if your health insurance drops you due to your disability.
- The DInamic Fundamental: The Fundamental policy is more basic, but it has a streamlined underwriting procedure. This means that’s it easier for you to be approved. You must work at least 30 hours weekly and not be in a high-risk profession.
Choosing the Right Option
So, which option is best for you? Our best advice is to get a range of quotes and compare the benefits you receive. Think carefully about what your needs might be if you weren’t able to work.
Your premium will be determined as a percentage of your salary.
A lot of other factors, like the elimination period and whether you want to factor in cost-of-living increases, will affect the benefits you receive.
Opting for an own-work policy may cost you more, but it might be worth considering.
What if you’re a surgeon, for example?
If you lose the use of one hand, you’d no longer be able to conduct surgical procedures. You could, however, find other employment which wouldn’t require extreme steadiness of the hand.
Now, that’s an extreme example, granted, but it serves to illustrate the point.
Some policies only payout if you are unable to work at all—which is not so good if you can still work but have to take a significant pay cut because of your disability.
Is This Coverage Essential?
Do you really need extra insurance over what you have already? Disability insurance can be pricey but think about how you’d survive if you couldn’t work for the next ten years.
If you look at from that perspective, the price starts seeming more reasonable. Still, you need to weigh the pros and cons carefully and look for the best deal within your budget.
Disability insurance might be a purchase you make grudgingly. It’s also one of those insurance products you might regret not having.
If you can guarantee that you’ll never be seriously injured in your life, then no, you don’t need disability coverage.
Unfortunately, there are a lot of things that could go wrong. Freak accidents occur, and a million different circumstances could lead to serious long-term injury.
You hope it will never happen to you, but you can’t guarantee it. Disability coverage could help fill in the gaps in income if something does happen to you.