Welcome to the disability insurance section of our Web Site.
This section covers the basics of disability insurance. If you
would like to get an individual disability insurance quote simply
complete and submit the appropriate form.
Protects your most valuable asset and your ability to earn an income.
- Each year 12% of the adult population suffer a long term disability.
- 1 out of every 7 workers will suffer a five-year or longer disability before reaching age 65.
- At age 32 your chances of suffering a three-month or longer disability is 6 times more likely than death.
- At age 35 your chances of suffering a three-month or longer disability is 50%.
- At age 45 your chances of suffering a three-month or longer disability is 44%.
- On average 7 out of 10 claims for Social Security disability benefits are refused the first time requested.
Statistics were obtained from Commissioner's Disability Tables and the Senate Finance Committee. Disability
insurance pays cash benefits to the policyholder in the event the insured is unable to work due to sickness or
injury. That cash benefit ranges from 50% to 70% of income. The insurance company will not pay more than 70%
of income because there must be an incentive to return to work.
- If you pay the premium the benefits are normally received free from income tax, if the premiums are paid by
an employer, the benefits are taxable as ordinary income.
A disability policy is composed of various elements:
- Elimination Period - It is the period of time the insured must wait after becoming disabled to receive
benefits. Typical waiting periods are 30, 60, 90,120,180, and 360 days. The longer the elimination period
the less expensive the policy.
- Benefit Period - It is the period of time the benefits will be paid following the elimination period. The benefit
period could be from 2 years to age 65 to lifetime. The longer the benefit period the more expensive the
- The Amount of Benefit - The larger the pay-out the more expensive the policy. The benefit will not normally
exceed 70% of income.
- Residual Benefit - Percentage of benefit paid if you return to work and are still partially disabled and cannot
return to work full time or cannot earn your full income.
- Own-Occupation - Pays a benefit if you are unable to return to your present occupation but can work doing
something else. For example, a doctor who is a surgeon, cannot return to surgery but can teach. This is the
most expensive type of disability policy.
- Reasonable or Any Occupation - Pays a benefit while disabled, but stops when you are able to return to
work at a job that matches your education and experience. This policy is less expensive than an Own-
- Occupation - Occupation is a factor used in determining rates. For example, a doctor's rate would be much
lower than a blue-collar worker.
- Guaranteed Renewable - Guaranteed Renewable policies cannot be cancelled by the insurance company
even if a change in the insured's circumstances would make him or her a greater risk. Plus, the insurance
company cannot make any changes to the provisions of the policy, or add restrictions. When purchasing an
individual disability policy it should be Guaranteed Renewable.
- Non-Cancelable - Guarantees future premiums will not be increased. When purchasing an individual policy
it should be Non-Cancelable.
- Presumptive Disability - Presumptive disability means that you are considered total disabled and eligible
for benefits for the loss of sight in both eyes or the loss of two limbs. The better contracts also presume
total disability for the loss of hearing in both ears, loss of the power of speech, or the loss of the use of two
Other Benefits that can be added to an individual disability policy, but could also increase the cost:
- Protection Against Inflation - A benefit that can be added that offers a cost-of-living adjustment for inflation
during a long-term claim.
- Automatic Increase Rider - Automatically increases monthly benefits for a specified period of time. A
typical increase is 5% compound.
- Future Increase Options - Allows the insured to purchase additional benefit amounts without proof of
- Capital Sum Benefit - Pays the insured a lump sum benefit up to 12 times the monthly benefit if the insured
loses the sight of one eye with no possibility of recovery or has a hand or foot severed. This benefit is paid
in addition to the other benefits.
- Rehabilitation Benefit - To help a disabled insured return to work, this benefit will pay some of the
expenses incurred when the insured enrolls in an approved rehabilitation center. This benefit is paid in
addition to the other benefits.
- Transplant & Cosmetic Surgery Benefit - Under this benefit, any disability arising from donating a
transplant organ, improving your appearance or correcting a disfigurement will be covered by the policy.
Types of Coverage
- Social Security does not just provide for retirement income but disability income as well. However, more
than 70% of the applicants who apply, fail to get coverage the first time they apply. You can get an estimate
of what your benefit might be by going to the Social Security web site.
- In 1992, the average monthly payment for a disabled worker was $642; the average monthly payment for a
family of a disabled worker was $1093.
- Eligibility is based on being unable to perform any gainful employment.
- You are eligible for benefits after you have been disabled for 5 months and if the disability is expected to
last 12 months.
- 85% of Social Security disability payments are subject to federal income tax if your income exceeds
$34,000 individually or $44,000 jointly.
Most employers are required to provide this coverage. The amount and duration varies by state. Workers
Compensation only pays if the disability occurs on the job, and usually lasts for only a few years and the
payments are low.
For individual policies, the applicant needs to qualify and go through an underwriting process, similar to the
process required for life insurance. The applicant could be subject to a higher premium or even be declined
based on his or her occupation, medical history, or lifestyle. Individual policies are usually purchased by high
income professionals because of the cost.
Some states require employers to carry group disability insurance anywhere from 26 to 52 weeks.
Group Long Term Disability (LTD)
Group LTD is carried by almost half of mid-size to large employers and provides long term benefits for at least 5
years covering about 60% of salary. The premium is usually very low, does not require proof of insurability, and
often is fully paid by the employer. If you would like to get a Disability Insurance Quote, click here.
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