Long-Term Disability Insurance: Protects Your Income When Injury or Illness Keeps You from Working
If a serious illness or injury prevents you from working, most families are unprepared for months—or years—of lost paychecks. Long-term disability insurance ensures financial security even when the unexpected happens, offering peace of mind for you and those who depend on your income.
See Long-Term Disability Insurance in Action
Real scenarios that show exactly when and how long-term disability insurance protects you and your loved ones.
A Broken Leg That Wouldn’t Heal
Michael was an active cyclist who broke his leg in a serious fall. What he thought would be a short recovery turned into months off work, and his long-term disability insurance replaced 60% of his salary, covering $2,500 each month. Instead of draining savings and worrying every day, Michael’s only concern was getting better—his finances were secure.
Unexpected Cancer Diagnosis
Sarah, a single parent, was diagnosed with cancer and faced months of treatment. Long-term disability insurance kicked in after her short-term benefits ended, replacing $3,800/month in lost income. Instead of choosing between rent and medical care, Sarah maintained her home and kept her daughter’s life stable while focusing on recovery.
Life-Changing Spinal Injury
When Casey suffered a sudden spinal cord injury in an accident, long-term disability benefits provided 60% of their previous earnings—over $4,500/month—for years while Casey adapted and pursued retraining for a new career. Coverage protected the family home and future, avoiding six-figure losses that could have led to bankruptcy.
Everything You Need to Know About Long-Term Disability Insurance
The complete picture: what's covered, what's not, and how to decide if you need it.
Long-Term Disability Insurance (Plain English)
Long-term disability insurance replaces part of your income if a serious illness or injury keeps you from working for months or even years. If you're unable to earn a paycheck, this coverage regularly pays a portion of your lost salary, so you can focus on recovery instead of financial worries. The key thing to understand is that it protects your finances and standard of living if the unexpected strikes.
The Details That Matter
Long-term disability policies have a waiting period (often 90 or 180 days after you stop working) before benefits begin. They usually cover 60% of your gross income (subject to policy limits), and benefits may last from 2 years to full retirement age. Pre-existing condition exclusions and exact coverage definitions vary, so it's crucial to review your plan. Most benefits are tax-free if you pay the premium.
Long-Term Disability vs. Short-Term Disability
Long-term disability insurance is NOT the same as short-term disability insurance. Long-term disability covers you for illnesses or injuries that keep you from working for months or years, while short-term disability covers you for temporary absences of a few weeks to several months. You typically need both to be fully protected.
Who Needs Long-Term Disability Insurance?
You typically need this coverage if:
- You are an employee who depends on a steady income
- Your family relies on your earnings for essential expenses
- You do not have enough savings to cover 6+ months without a paycheck
You might skip this coverage if:
- You have substantial independent wealth or a partner who can fully support your family indefinitely
Limits & Options
Benefit amounts are usually set as a percentage of your salary (commonly 60%), up to a specific dollar cap. Elimination periods (how long you must be out before benefits start) can range from 90 to 180 days. Policies may offer own-occupation or any-occupation definitions, which affect when and how long you can collect benefits. Optional riders (like cost-of-living adjustments) are available to enhance protection. Review your options for the best fit.
What's NOT Covered by Long-Term Disability?
This coverage does NOT cover:
- Injuries that occur while committing a crime: Claims related to illegal activities are excluded
- Benefits beyond your policy period: Coverage ends when your benefit period expires or when you return to work
- Pre-existing conditions in the exclusionary period: Illnesses or injuries that arose before coverage may be excluded for a set time
For job-related injuries, you'd need Workers' Compensation. For temporary disability, you'd need Short-Term Disability Insurance.
Ready to Add Long-Term Disability Protection?
Now that you understand long-term disability insurance, see how affordable peace of mind can be with personalized quotes from 26+ top carriers.
Experience You Can Trust
Over 1,430 customers trust our expertise to explain benefits clearly and find the right protection for their unique needs.
4.9/5 Stars
Google Reviews from real customers, just like you
97% Retention
Customers stay with us year over year over year
Independent
We work for you, not insurance companies
Local
Fort Collins owned & operated since 1992
How Long-Term Disability Insurance Actually Works
Understanding exactly what happens when you file a long-term disability claim – from start to finish.
The Claims Process
- Notify Your HR Department or Insurance Provider: Inform your employer or the insurer as soon as it looks like you’ll be out of work longer than your policy’s waiting period. They’ll give you forms and outline required documentation.
- Submit Medical Evidence: Work with your healthcare provider to gather and submit medical records and physician statements confirming your inability to work.
- Claims Review: The insurance company reviews your claim, may request additional information, and determines your benefit eligibility. This usually takes a few weeks.
- Benefit Payments Begin: Once approved and the elimination period is over, payments are issued directly to you, typically monthly, continuing as long as you qualify and up to your policy’s maximum period.
What You Pay
Your premium—typically $25 to $75 per month—secures this safety net. There’s usually no deductible; instead, the waiting (elimination) period acts as your "cost-share," meaning you cover your own income for the first 90–180 days of disability. Premiums can be employer-paid or split with the employee. The protection is well worth the cost if your income supports your family.
Timeline
Basic claims may be approved within 2–4 weeks after documentation is submitted. Complex claims (like those needing specialist reviews or appeals) may take up to 90 days. Most clients experience prompt communication and regular updates throughout. Quick, accurate filing is the largest factor in reducing delays.
The Real Cost of Going Without Long-Term Disability Insurance
Understanding the real financial impact: what you pay for coverage vs. what you risk without it.
Short Hospital Stay
Annual Coverage Cost: $300
Scenario: You break your ankle, need surgery, and miss three months of work with lost wages totaling $15,000.
Without Coverage: $15,000 out of pocket
With Coverage: $0 (coverage begins after the elimination period—the rest replaced monthly)
Protection Value: $14,700 in this scenario alone
Major Illness Overhaul
Annual Coverage Cost: $600
Scenario: A cancer diagnosis keeps you away from work for ten months, with $40,000 in lost income.
Without Coverage: $40,000 out of pocket
With Coverage: $22,000 replaced (assuming a 60% benefit for 10 months)
Protection Value: $21,400 in this scenario alone
Catastrophic Accident
Annual Coverage Cost: $900
Scenario: A spinal injury makes work impossible for 2 years, leading to a $100,000 loss in salary.
Without Coverage: $100,000 loss
With Coverage: $48,000 replaced over 2 years (after the elimination period)
Protection Value: $47,100 in this scenario alone
The Economic Reality
For most employees, long-term disability insurance costs $25–$75 per month—less than a daily coffee habit. A single serious accident or illness can cost $20,000 to $100,000 or more in lost income, taking years to recover. The math is simple: Your coverage pays for itself if you’re ever out of work, safeguarding both your savings and your family’s security.
4 Costly Long-Term Disability Insurance Mistakes to Avoid
Learn from others’ mistakes—avoid these common errors that can leave you unprotected when it matters most.
Relying on Savings Alone
Many people assume their savings will cover a long-term absence, underestimating how quickly living costs add up. Most savings last only a few months. Instead, make sure your income protection lasts as long as you’d actually need for recovery.
Assuming Workers’ Comp Is Enough
Some believe job-based injuries are fully covered by workers’ compensation. Most disabilities are not work-related, so workers’ comp won’t help. Long-term disability insurance protects you when illness or off-the-job injuries keep you from working.
Not Understanding Waiting Periods
Overlooking your policy’s elimination period can result in financial gaps at the worst time. If benefits start later than you expect, you could go months with no income. Always know how long you need savings before benefits begin.
Ignoring Policy Exclusions
Disabilities from pre-existing conditions or risky activities (like skydiving) might not be covered early in your policy. Assumptions can leave you with denied claims. Carefully review your plan’s exclusions, and ask your broker to clarify anything you don’t understand.
Find answers to your most pressing insurance questions right here.
Explore Your Coverage Options
Discover the best insurance coverage tailored to your individual needs and protect what matters most.