Finding the Best Supplemental Disability Insurance for You
(Because sometimes your disability coverage needs an extra boost)
Christine Lacagnina |September 8, 2019
Providing for a family or even just for yourself is hard work. Getting seriously injured or ill can really throw a wrench in your routine and shovel a ton of additional stress onto your plate.
Disabilities may leave you unable to perform your previous job tasks and lead to huge pay cuts. On top of the medical costs required for your health care, a lower salary can seriously impact your quality of life.
Fortunately, there are several types of disability insurance and supplemental disability policies available to help in those exact situations. Independent insurance agents are standing by to help you get set up with the right kind of disability insurance to meet your unique needs.
But first, let’s take a closer look at supplemental disability insurance, and when and why you might need it.
What Is Supplemental Disability Insurance?
In a nutshell, supplemental disability insurance is a policy designed to fill in the gaps between your former income and the amount your existing disability insurance pays out in the event you become disabled.
If you get injured or ill, become unable to complete the same job you did before, and suffer a pay cut as a result, your existing disability policy may not be enough to make up the difference in your income.
Do I Need Supplemental Disability Insurance?
You might, if your existing disability policy doesn’t close the gap in your income following an injury/illness nearly enough. Standard disability insurance policies come with strict limits and often only cover 40%-60% of your regular income.
You may also be limited to a payout of only $3,000-$5,000 per month. If you’re used to earning much more than this, your existing disability coverage may not be enough for you to maintain your lifestyle.
Supplemental disability policies provide the following benefits:
Higher coverage limits: Supplemental disability policies allow you to receive a payout that much more closely resembles your income from before you got injured/ill and became unable to perform your previous job duties. Supplemental disability policies often pay closer to 80% of your pre-disability income.
More complete income coverage: While standard disability policies only factor base salaries or hourly rates into their calculations for monthly coverage benefits, supplemental disability policies also take other income sources like bonuses and commissions into account. Because of the additional income sources factored into supplemental disability coverage, policyholders have a greater chance of receiving a payout much closer to what they previously earned.
Supplemental disability insurance may be especially important for formerly high-income earners. If you’re someone who’s used to making an annual salary of at least $120,000, or more than $10,000 monthly, a benefit cap of $5,000 per month might not even come close to what you’ve become accustomed to living off of.
Supplemental disability insurance allows you a greater chance of maintaining your usual lifestyle following an injury/illness.
What’s the Difference between Short-Term and Long-Term Supplemental Disability Insurance?
Well, the difference stems from your main disability policy. Short-term disability insurance comes with a maximum coverage period of two years, but it’s often purchased for a period of less than six months.
Long-term disability insurance is meant to cover you for a much longer period, ranging from a few years to the rest of your life. Short-term and long-term disability policies come with different coverage limits and premiums.
When someone purchases a short-term disability policy and is still disabled after the coverage period ends, they must switch to long-term disability insurance to keep receiving benefits.
However, some people aren’t able to get long-term disability insurance, so supplemental policies can help to fill in those coverage gaps. Supplemental disability insurance can be combined with both short-term and long-term policies. The key difference is the duration of the disability.
Is Supplemental Disability Insurance Worth It?
That depends on a few different things. For starters, the cost of your main disability insurance policy is based on several factors, like:
Your health history
The cost of a disability insurance policy is often between 1% and 3% of your annual gross income. Your payout benefits are also taxed if the policyholder is your employer. So you may already be paying a decent amount toward a standard disability policy.
However, many folks will still find supplemental disability insurance to be well worth the cost of an additional premium.
Coverage may be right for you if the following factors apply:
You’re a high-income earner.
Your main disability policy’s benefit is too small.
Your main disability policy’s coverage period is too short.
Your employer offers coverage that doesn’t meet your needs.
You lose your disability policy following a job change.
You have private long-term disability insurance and also qualify for Social Security disability insurance (SSDI).
If you have employer-sponsored long-term disability insurance, any approved SSDI claims will subtract from your main policy’s benefit amount — which is already taxed. However, if you have a private long-term disability policy along with supplemental disability insurance AND also qualify for SSDI, your benefit amount won’t be affected.
If you’re still unsure of whether supplemental disability coverage is right for you, an independent insurance agent can help answer your questions and clear up any confusion.
How To Find the Best Supplemental Disability Insurance
In order to get the protection you need (and deserve), you’ll want to work with a trusted expert. Independent insurance agents will not only know where to find the best coverage and price, but also help to make sense of the fine print.
Consider your unique needs, then connect with an agent to help you take it from there. Have a list of your specific concerns and desires handy before you reach out, to help the process run even more smoothly.
Compare Supplemental Disability Insurance Quotes with an Independent Insurance Agent
We all know how valuable your time is, so why spend it doing all the hard work yourself? From supplemental disability insurance to special add-on policies, expert independent insurance agents will help you determine which types of coverage make the most sense for you.
Independent insurance agents stay on top of the insurance industry and all the latest discounts so you don’t have to. That means they’ll help find the right coverage at the right price for you.
They’re not just there at the beginning, either. If disaster strikes, your agent will be there to help walk you through the claims process and make sure you’re getting the benefits you're entitled to. Now that’s thinking ahead.