Individual Disability Insurance
What types of disability insurance are available?
Disability insurance generally falls into two categories:
- Short-Term Disability (STD): Policies typically have a waiting period of 0 to 14 days and provide benefits for no longer than two years.
- Long-Term Disability (LTD): Policies typically have a waiting period of several weeks to several months. Benefits may continue for several years or for the remainder of your life.
Important policy protection features
Disability policies may include the following renewal and cancellation protections:
- Non-cancelable: The insurance company cannot cancel the policy except for nonpayment of premiums. You can renew the policy each year without an increase in premiums or a reduction in benefits.
- Guaranteed renewable: You can renew the policy with the same benefits, and the insurer cannot cancel it. However, the insurer may increase premiums for everyone in the same rating class.
Additional disability coverage options
In addition to traditional disability policies, consider the following options when selecting your coverage:
- Additional purchase options: These give you the right to purchase additional insurance at a later date for an additional cost.
- Coordination of benefits: Your benefit amount is coordinated with other disability benefits you receive. The policy establishes a target benefit amount and pays the difference not covered by other policies.
- Cost-of-living adjustment (COLA): This option increases your disability benefits over time based on changes in the cost of living, generally measured by the Consumer Price Index. Selecting a COLA typically increases your premium.
- Residual or partial disability rider: This provision may allow you to return to work part-time, earn part of your salary, and receive a partial disability benefit while you remain partially disabled.
- Return of premium: This provision may refund part of your premium if you do not submit a claim during a period specified by the policy.
- Waiver of premium: This provision may waive your policy premiums after you have been disabled for 90 days.