Best Individual Disability Insurance

What Is the Best Individual Disability Insurance for You

(Because you deserve to feel protected, right?)

Best individual disability insurance

What would you do if you were unable to work because of an illness or injury? The financial impact of a disability can be devastating. The average disability claim lasts 34.6 months, and that's a long time for most people to go without a paycheck. Disability insurance pays a benefit if you can't work because of illness or injury. About 40% of private industry employees had access to some form of disability insurance through their employer. What if you're self-employed, or your employer doesn't offer group disability? Individual disability insurance can protect you and your family.

Truth is, individual disability insurance is complicated. There's no getting around that, so put the right type of professional to work for you. An independent insurance agent's role is to simplify the process and help you make smart choices.

Finding the Best Individual Disability Insurance

Unfortunately, you can't just jump on Amazon or go to the big box insurance store for the best deal. Individual disability insurance products are regulated by your state insurance department. You can only buy it from an insurance company and agent licensed in your state.

How do you know what company to buy from? What makes one policy better than another? Well as it happens, you're in luck. Here's a guide to finding companies, products, and agents.

Questions to Ask Yourself at the Beginning

Disability insurance is a financial tool. Like any other tool, it helps to know what you want it to do before you buy it. Here are some questions to help you figure out the best individual disability insurance options that are right for you. 

  • Does your employer provide coverage? Some employers will have basic short-term disability coverage or other plans available. Individual disability coverage can fill any gaps.
  • What do you want to protect? If you are a physician, attorney, or other professional, you may want to protect your income and the investment made in your career. If you became disabled and couldn't continue in your profession, changing occupations might not be an attractive option. There are disability policies specifically designed for the one called "true own occupation."
  • When do you need the benefit to begin? How long would you be able to go without a paycheck? 
  • How much do you need? What resources are available to you? Could you adjust your lifestyle?
  • What is your budget? Individual disability insurance is very flexible and can be customized to your budget.

What's the Best Individual Disability Product for You?

The decision basically comes down to your needs. If you're just going to be out for a few months, a short-term will protect you just fine. But if you've got rehab on the horizon and no set back-to-work date, you'll want to look into long-term disability for sure.

Short-Term Disability: This pays a benefit for a limited time, usually less than one year. Short-term disability can cover conditions not covered by long-term disability like pregnancy. Benefits can begin right away. Short-term disability may be a good option if your budget is very limited and you need coverage to begin within a short time. Social Security may provide a long-term disability benefit if you qualify. Bear in mind, though, that qualifying for Social Security disability is not easy and the benefits are modest. The average Social Security disability benefit paid as of November 2019 is $1,237 per month.

Long-Term Disability: This pays a benefit for two years or more. Benefits begin after an elimination period of 30 days to one year. Benefits are paid when the definition of total or partial disability is satisfied. Long-term disability is the best option because it provides coverage for an extended period of time. The cost can be managed by modifying elimination periods, benefits, and the definition of disability. Cost can also be reduced by offsetting the benefit by any Social Security payments received.

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What's the Best Individual Disability Insurance Policy for You?

Once you have determined the type of disability insurance you need, the next question is what policy gives you the best value for your premium dollar? Companies often specialize in certain occupations and coverage. Some may be more competitive than others. Here's what to look for:

  • Exclusions: It's just as important to know when the benefit will not be paid. Make sure you understand provisions for preexisting conditions, mental and nervous disorders, substance abuse, and any other exclusions.
  • Earnings: If your income includes commissions, bonuses, or other compensation, make sure you know what is included in the benefit.
  • Partial disability: What benefit is payable if you can only work part time. The definition is very important. Some policies will require a loss of time and income, while others only require a loss of income.
  • Renewability: Individual disability policies have three types of renewal provisions. Non-cancelable and guaranteed renewable has a premium that cannot be changed. The policy can't be canceled if the premiums are paid. Premiums for guaranteed renewable policies can be raised on approval from the state insurance department. The coverage cannot be canceled if premiums are paid. Conditionally renewable policies can be cancelled, and should generally be avoided.

Finding the Best Individual Disability Insurance Company

The first thing to consider is does the company cover your occupation. Some companies specialize in skilled trades, others specialize in professional coverage. Another consideration is financial strength. A.M. Best, S&P, Moody's, and Fitch rate insurance companies based on their ability to meet policyholder obligations. While their rating measures differ, they can be classed by high, medium, and low ability to meet claims. Fourteen insurance companies represent 90% of the new sales of individual disability insurance in the US. The chart below lists them along with their ratings from the four agencies.

Company A.M. Best S&P Moody's  Fitch
Ameritas A A+ N/A N/A
Assurity A- N/A N/A N/A
Guardian A++ AA+ Aa2 AA+
Illinois Mutual A- N/A N/A N/A
Mass Mutual A++ AA+ Aa3 AA+
Mutual of Omaha A+ AA- A1 N/A
Northwestern Mutual A++ AAA Aaa AA+
Ohio National A A- A3 N/A
Principal A+ A+ A1 AA-
RiverSource A+ AA- Aa3 N/A
State Farm A++ AA N/A N/A
The Standard A A+ A1 N/A
Thrivent A++ N/A N/A AA+
Unum A- N/A N/A N/A

Highest ability to
meet obligations
Medium ability to
meet obligations
Lowest ability to
meet obligations
A.M. Best A++ To A- B++ To B- C++ To C-
Moody’s Aaa To Aa A To Baa Ba To Caa
Fitch AAA To AA- A+ To BBB- BB+ To CC

Finally, the NAIC (National Association Of Insurance Commissioners) provides the Consumer Information Source online. The CIS provides information about insurance companies including complaints from consumers.

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Our independent agents shop around to find you the best coverage.

Finding the Best Independent Insurance Agent for You

Disability insurance polices are complex, and searching through the options can be time consuming and frustrating. The right agent should know and understand the disability insurance market, and they should have access to multiple companies so they can get you the right coverage at the right price. Independent agents stay on top of the industry and the latest products so you don’t have to. They’ll be there from start to signature. And they represent you, not the insurance company. What could be simpler?

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Bureau of labor statistics employee access to group disability plans 2018


Ameritas.Com Consider The Odds

Milliman 2018 Individual Disability Survey