How long will your disability benefits last, and how long will they take to kick in? Your financial future could depend on the answers to those questions. Your disability insurance policy can’t be fully effective unless you choose the right benefits period when you buy it.
Luckily, this painless guide is here to answer all your questions about disability insurance benefits periods. When you’re ready to shop, expert independent insurance agents are here to answer your questions and find you the disability coverage you need at the right price.
What Is a Disability Insurance Benefits Period?
A benefits period is the length of time you are eligible to receive benefits (payments). How long your disability insurance benefits period will be depends on whether you’re accessing government or private benefits.
If you have private disability insurance, it will also depend on whether you purchased long-term or short-term disability insurance (or both), as well as on the specific details of your policy.
What Are US Government (Social Security) Disability Benefits?
There are two main government disability benefit programs: Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). In 2016:
- SSI capped payments to qualifying individuals at $733 per month and to qualifying couples at $1100. SSI is also subject to strict income and asset limits that can prevent you from saving money or ever going back to work even if you feel up to it.
- SSDI paid disabled workers supporting a spouse and one or more children an average of $1983 per month. That number was slightly higher for a retired disabled couple ($2,212) and much lower for a single disabled worker ($1,166).
Accessing government disability benefits means undergoing an expensive, invasive and often years-long legal process. To access the more desirable SSDI income, you must also have a strong track record of work, which can be prohibitive for workers who become disabled when they're young.
For these reasons, it’s important not to rely on government disability coverage to replace your income especially if you are supporting a family. Private disability insurance can bridge the gap — and its benefits period can be just as long as that of government benefits.
Social Security Disability Benefits Period
You can continue to receive SSI until your death. However, you must continue to prove your eligibility over time. SSDI payments last until retirement age when they automatically convert into Social Security retirement benefits.
Short-Term Disability Insurance Benefits Period
Private short-term disability insurance is designed to cover temporary disabilities. Benefits periods for short-term disability insurance vary. They can be as short as three months or as long as five years. Most commonly, they’re somewhere in the middle: one to two years.
Long-Term Disability Insurance Benefits Period
Private long-term disability insurance is designed to cover disabilities that are permanent or, at minimum, projected to last for a long time. Benefits periods for long-term disability insurance can be as brief as two years or they can continue until your projected retirement (usually 65-70 years old).
Can I Choose a Longer Benefits Period for Disability Insurance?
Yes, but there’s a catch — it will cost you more in premiums. Most private insurance companies offer multiple options for benefits periods to their customers. To get the most out of your disability insurance, you should choose the longest benefits period you can comfortably afford.
Is There a Waiting Period for Disability Benefits?
There is a waiting period (also called an elimination period) for both government disability benefits and disability insurance benefits. However, private disability insurance typically has a shorter waiting period, an easier claims process, and possibly even a larger benefit amount than government options.
How Long Is the Waiting Period for Disability Benefits?
It depends on what kind of disability benefits you’re seeking. Government disability benefits have a waiting period of either zero or five months (for SSI and SSDI respectively), but the legal process to get them can take much longer.
Private disability insurance has its own waiting periods. Short-term disability insurance has shorter waiting periods (zero to ninety days) than long term disability insurance does (up to nine months).
Elimination Periods for Disability Insurance
|Type of Benefit||Length of Time|
|SSDI Benefits (Gov't)||At least five months after onset of disability|
|SSI Benefits (Gov't)||No waiting period, but can take years to get approved|
|Short-Term Disability Insurance||Zero to ninety days|
|Long-Term Disability Insurance||Two weeks to nine months|
Source: iii.org and Nolo's Guide to Social Security Disability
Waiting Period (Elimination Period) for Social Security Benefits
The two types of government disability benefits are Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). SSI doesn’t have a formal waiting period. SSDI’s waiting period is five months. Both can involve lengthy court processes to get, however, adding to the wait.
Can I Choose a Shorter Waiting Period?
Private disability insurance companies usually offer several different waiting period options to their customers:
- Choosing a shorter waiting period will make your premiums more expensive, but you’ll get your benefits faster if you need them
- Choosing a longer waiting period will make your premiums cheaper, but you’ll need to wait longer before getting your benefits
You should choose the shortest waiting period that you can comfortably afford in order to get the most out of your disability insurance.
What about the Waiting Period for Short-Term Disability Benefits?
Short-term disability insurance sometimes has no waiting period at all — you can get approved right away. If there is a waiting period, it’s likely to be short, typically in 14-90 days.
What Is a Closed Period?
It’s possible to get SSDI benefits from the government for what’s called a “closed period” which is a period of disability that ended when you went back to work. (This is not true of SSI benefits.) You can receive up to six months of retroactive benefits for a closed period.
Part of why the government allows people to receive retroactive benefits is because the wait to get approved can be so long that you’ve recovered from your disability by the time you’re able to receive benefits.
Private disability insurance doesn’t allow retroactive benefits. However, accessing your private insurance’s benefits is typically much faster and more straightforward than getting government benefits.
Benefit Periods for Individual Plans vs. Group Plans
Private disability insurance is sold in two ways: through workplaces and other (typically professional) groups called group insurance, and through insurance agents to individual consumers. This second type is called individual disability insurance.
Each type has pros and cons. They calculate benefits differently and may have different benefits periods and waiting periods.
Group vs Individual Disability Insurance
|Benefits Period||Pros and Cons|
|Individual||Flat income amount||Short Term: |
One to five years
Long Term: From two years until retirement
|Pros: Full control over the coverage; no loss of coverage when you change jobs; can shop from any company for the best offerings|
Cons: Can be expensive if your risks are higher
|Group||Percentage of income||Short Term: Less than one year|
Long Term: From two years until retirement
|Pros: If you're at high risk for disability, pooling coverage with others can be cheaper|
Cons: Limited options; you lose coverage when you switch jobs
Source: Principles of Life and Health Insurance
In short, group coverage provides safety in numbers, lowering your premiums if you’re older or have other risk factors (e.g., a family history of disability), but it can also cause you to lose out on better deals that you could qualify for individually.
Plus, you’ll lose your group coverage every time you change jobs which could mean that you’ll be left without disability benefits when you need them most.
If you just can’t choose between one or the other, you may be able to purchase a smaller amount of both types of coverage some through your workplace and some individually — and get the best of both worlds.
How an Independent Insurance Agent Can Level Up Your Disability Insurance
Shopping for disability insurance yourself can be a downer. It’s hard to know where to look or how to find a good deal. Luckily, independent insurance agents are here to handle the hard parts for you.
Independent insurance agents are industry experts who aren’t bound to any one company. They can compare quotes from multiple insurers to find you the coverage you want at the right price. Shopping for disability insurance with an independent insurance agent is shopping smart.
TrustedChoice.com Article | Reviewed by Paul Martin
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The Long Term Care Handbook (3rd edition) by Jeff Sadler
Nolo’s Guide to Social Security Disability: Getting and Keeping Your Benefits (8th edition) by David A. Morton III, M.D.
Principles of Life and Health Insurance (2nd edition) by Dani L. Long and Gene A. Morton