I found Set for Life online and was immediately impressed with their prompt reply to my inquires and detailed response regarding my insurance needs.  I thoroughly enjoy working with Set for Life as they not only provide a personal service, but a very professional and complete service. I am very satisfied with their company and plan on utilizing their services for many years to come.

— Justin P., Business Owner, San Diego, CA

Long term disability insurance (also known as LTD) is defined as insurance with an elimination period of at least 90 days.  The benefit period (time when benefits are paid after satisfying the elimination period) is typically 2 years, 5 years, 10 years, to age 65 or lifetime. The longer the benefit period, the higher the premium. Long term disability insurance is intended to cover more catastrophic types of claims that last a long period of time. 

For an individual disability insurance policy, a 90 day elimination period tends to be the most cost effective elimination period for a long term disability policy. Depending on the company and policy, a 60 day elimination period premium may cost as much as double that of a policy with a 90 day elimination period. Instead of paying the significantly higher premiums, you would probably be better off putting the extra money in a savings account to have funds available to you.

Short term disability insurance is usually in the form of a group disability policy through an employer. To purchase short term disability insurance as in individual can be very expensive.  Short term disability policies typically start after 7 days and have a benefit period of 6 weeks to 6 months, depending on the policy. Sometimes short term disability insurance is also called sick pay.

Long term disability comes in both individual and group policies.  Group policies tend to have benefit periods to age 65. It is important to read the group policy carefully and to be aware of the definition of disability.  A group policy typically requires the claimant to be totally disabled and not working before a claim is paid. Furthermore, if the employer is paying the premiums, the benefits paid are taxable.

Long term individual disability insurance tends to be more expensive than a group policy, but is more comprehensive. It usually requires medical and financial underwriting to qualify.  The definition of disability tends to be more comprehensive, covering you in your own occupation or medical specialty and has more riders available.

How do you decide if you need short term or long term disability? If only the answer were easy! If you actually knew how long your claim would be, you would know how long you needed the benefits. However, the best way to assess is to look at your financial situation and determine how long you could survive without your income.

If you are young and new in your career, you may not have much money in savings or in a retirement fund. You also have a potentially longer period of vulnerability and therefore may need a longer benefit period. 

If you are considering a long term disability insurance policy and have a significant amount of money saved for retirement, you may be able to consider a shorter benefit period to cover your risk until you are able to tap your retirement savings without penalties.

For more information about short term and long term disability insurance, please contact the Set for Life office at 888-553-3559.

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