Disability Insurance Benefits

Disability insurance is pretty straightforward when it comes to the benefits offered, but there are several key differences to note when choosing your policy. For example, you may want to take advantage of the benefits offered by long-term disability insurance over short-term disability insurance. Or maybe individual disability insurance would work better for you than group disability insurance.

An independent insurance agent can also help you find the plan that offers the best disability insurance benefits. They'll get you matched with the ideal policy at a great rate. But first, here's a guide to what you need to understand about disability insurance benefits and how they differ.

What Is Disability Insurance?

Disability insurance is a supplement to your regular income that you can use to pay bills and stay afloat when you are unable to work due to an illness or disability. A disability insurance policy typically pays between 40%-70% of your normal income. However, there are several types of disability insurance, and each comes with slightly different benefits.

Understanding the Disability Insurance Benefit Period

The disability insurance benefit period refers to the maximum length of time predetermined by both parties (i.e., the insured and the insurer) for which the insurance company will pay the disability benefit. Benefit periods longer than one year are considered long-term disability benefits, and those less than one year are considered short-term disability benefits.

• Insured: The insured is the person or organization covered under the disability insurance policy. They are typically the owner of the insurance policy and pay the premiums, but not in every case.
• Insurer: The insurer is the entity, typically an insurance company, that provides the insurance coverage or policy to the insured.

An independent insurance agent can help you choose the type of disability insurance that comes with the right benefit period for your needs.

Understanding the Elimination Period for Disability Insurance

The elimination period is the waiting period before the policy benefits start. In short-term disability plans, this can be as soon as seven days. 

In long-term disability plans, it's usually 90 days before the benefits kick in. These periods can often be adjusted if you're willing to pay more for your coverage.

What Are Disability Insurance Riders?

Disability insurance riders are optional coverage that can be used to customize the plan to your individual needs. Some riders, such as social insurance riders, are used to manage cost, while others, like cost-of-living benefits, are used to enhance coverage. Your independent insurance agent can help you add any disability insurance riders that may enhance your benefits.

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What Is Social Security Disability Insurance? 

Social Security disability insurance (SSDI) benefits can pay out for as long as you are disabled, until your normal retirement age. At that point, your disability benefit stops and your Social Security retirement benefit begins.

Average SSDI monthly benefit

The monthly benefit you can earn from SSDI depends on your income and other factors. Last year, the average monthly SSDI benefit was $1,707.75.

SSDI eligibility requirements

There are three key eligibility requirements for SSDI benefits. To qualify for SSDI benefits, an individual must have:

• A medical condition that meets Social Security's definition of disability
• Worked in jobs covered by Social Security
• Worked long enough and recently enough under Social Security

The requirement for the length of time working under Social Security to qualify for SSDI benefits changes annually. An independent insurance agent can help you determine if you're eligible for SSDI benefits.

Long-Term Disability Benefits vs. Short-Term Disability Benefits

The biggest difference in benefits between long-term and short-term disability insurance is the period of time the benefits can last. Short-term disability insurance typically offers benefits for a term ranging from three to six months, while long-term disability insurance benefits can last for several years, such as five, 10, or 20 years, or until you retire. Short-term disability insurance plans also come with a shorter elimination period than long-term disability plans.

Short-term disability insurance typically provides a greater percentage of your income in benefits, which can be as much as 70%. Long-term disability insurance benefits typically range from 40%-70%. 

Differences between short-term and long-term disability insurance benefits

Group Disability vs. Individual Disability Insurance Benefits

Group disability insurance is tied to your base salary, or W-2 income. In contrast, individual disability insurance typically provides several compensation sources. While group disability insurance benefits usually do not factor in bonuses, commissions, incentives, and retirement plan contributions, individual disability insurance often does.

Group long-term disability insurance typically integrates benefits with SSDI, meaning your benefits may be reduced by additional benefits you receive. However, individual long-term disability insurance policies might not come with benefit reductions if you also receive SSDI. 

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Return to Work Benefits for Disability Policies

The Social Security Administration (SSA) offers work incentive programs to SSDI beneficiaries. These programs can help individuals return to work part-time while maintaining their benefits. 

Individuals can get a feel for returning to work without losing their benefits before they go back to full-time employment. These individuals will need to provide the SSA with certain required information to continue receiving benefits.

How to Apply for Disability Benefits

You can apply for disability insurance benefits online, by phone, or in person. You may also be able to apply through your employer. For SSDI benefits, you can apply directly through the SSA's official website. An independent insurance agent can also help you apply for disability income insurance benefits.

How Much Does Disability Insurance Cost?

Disability insurance pricing and benefits vary. Each policy, benefit amount, and coverage term is different. The cost of your policy may depend on several factors, including your location, job, annual income, policy type, and more. An independent insurance agent can help you find affordable disability insurance near you.

Here's How an Independent Insurance Agent Can Help

Independent insurance agents have access to multiple disability insurance companies, so they're free to shop and compare quotes and policies for you. They'll get you matched with the right type of coverage that offers the best benefits for your unique situation. And down the road, your agent can help walk you through the disability insurance claim process and update your coverage when necessary.