What is long-term disability insurance?

Long-term disability insurance replaces a portion of your income if you become unable to work due to a disability. It can help you maintain financial stability for an extended period, often until retirement age.

What is disability insurance?

What would you do if you could not work to earn an income for a few weeks or even months? How about a year or more? This may sound like something that won’t happen to you, but it’s far more common than you think. At some point during their careers, 25% of young people will experience a disabling event that will cause them to miss work for a year or more.¹ That event can include common medical conditions such as cancer, heart disease, musculoskeletal injuries, and some mental health conditions.

This is where disability insurance comes in to protect you. It is designed to provide a portion of your income in the event that you can’t work. Each policy is different, but long-term disability usually provides 50%–70% of your income while you recover.

Short-term vs. long-term disability

Short-term disability insurance usually ranges from a few weeks to a few months. It replaces a portion of your income during the initial period of a disability, allowing you to manage your financial responsibilities while you begin treatment.

On the other hand, long-term disability insurance comes into play when a disability extends beyond the period covered by short-term disability insurance. It provides benefits for years, often until retirement age if needed. Long-term disability insurance is essential for situations in which the disability persists or becomes permanent. Short-term and long-term insurance are often used together, with access either through an employer or an individual policy, to provide comprehensive protection.

Related: Short-term vs. long-term disability insurance

How does long-term disability work?

When you have coverage in place, long-term disability insurance kicks in after you experience a disabling event. It usually begins with an interval called an elimination period, lasting anywhere from a month to a year during which you can’t collect benefits. Generally, short-term disability covers this gap. After this time, the insurance company will begin making monthly benefit payments to you based on your pre-disability income as specified in the policy. Read more about the timeline of how disability insurance works.

What does long-term disability cover?

When most people think of disabilities, they imagine catastrophic workplace accidents resulting in lost limbs. The reality is far less dramatic. Every day people are diagnosed with common illnesses and injuries that keep them away from work for extended periods. Long-term disability typically covers all of these conditions and more:

• Cancer
• Diabetes
• Back injuries
• Joint pain and arthritis
• Severe accidents and injuries
• Mental health conditions
• Neurological disorders

How long does it last?

The duration of long-term disability insurance varies depending on the terms outlined in the specific policy. In any case, the policy will stay in effect and continue to provide you with regular payments until you recover and are able to return to work, or you reach the maximum benefit period. Some long-term disability policies may end at two years. Others might offer coverage until your retirement age. Group plans you get through your employer are more likely to offer less coverage than an individual policy you can purchase.

How to get long-term disability insurance coverage

The process is similar to obtaining many types of insurance. If offered through your employer, you may not need to do anything, and coverage could be guaranteed. If not, you’ll likely undergo a process called underwriting in which you’ll provide information about yourself, occupation and your medical history that the insurance provider will use to assess your risk and set your premiums. Once the policy goes into effect, you’ll pay a monthly premium, and, if a triggering event happens, begin to receive benefits.

Long-term disability through an employer

Many people can acquire long-term disability insurance through their employer as part of their employee benefits package. Sometimes it is included as a benefit for free, or you may have to pay a small monthly premium out of your paycheck. Consult with your HR or benefits team to understand your options and read through your benefits thoroughly during your open enrollment period. The drawbacks of employer programs are that they often provide minimal coverage, may not be customizable and, should you leave the job for any reason, your coverage will eventually end.

Individual disability insurance

If you are self-employed, do not have access through an employer, or simply want to supplement existing coverage, you can get an individual disability policy from an insurance provider. Going that route has a couple benefits. Unlike employee-provided options, you can customize your policy and it will always be in effect, even if you change jobs, as long as you keep it inforce. In addition, you can usually find much more comprehensive coverage options.

Long-term care insurance

Long-term care insurance often gets confused with long-term disability for obvious reasons. It is, however, an entirely different product that covers a different stage of life. Learn more about long-term care insurance.

Long-term disability insurance FAQs

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¹“Fact Sheet,” Social Security Administration, 2023.