What is long-term disability insurance?

It provides income protection for extended disabilities, typically kicking in after short-term disability ends and lasting until retirement age.

Long-term disability insurance is a type of insurance coverage designed to protect your income if you become unable to work due to a serious illness or injury that persists for a long period. It typically starts to pay benefits after you've exhausted short-term disability benefits, which usually cover the initial period of disability. Long-term disability insurance can replace a portion of your salary—often 60% to 80%—until you are able to return to work or reach the policy’s age limit, usually up to retirement age. It's an essential financial safety net that helps ensure you can still cover living expenses, medical bills, and other financial obligations even when you're not earning your usual income. This insurance not only safeguards your income but also offers peace of mind knowing you have support when you need it most.

Imagine you’re a software engineer who unfortunately injures your back severely while skiing. Your doctor informs you that you'll require several surgeries and rehabilitation, keeping you out of work for at least two years. Initially, your short-term disability insurance covers the first 90 days. After that, your long-term disability insurance policy kicks in and begins to pay you a portion of your monthly salary. This means even while you concentrate on healing and getting back on your feet, you don't have to worry excessively about your mortgage payments or household bills because part of your income is covered by this policy.

If you're considering enrolling in long-term disability insurance through your employer or purchasing a policy on your own, start by reviewing your current financial situation and future obligations. Look at your household expenses and think about how long you might be able to manage without your main source of income. Compare different policies and check the specific terms related to the percentage of income replaced, waiting periods, and duration of benefits. It may also be beneficial to consult with a financial advisor who can help tailor your coverage based on your personal circumstances. Remember, investing in long-term disability insurance is about protecting your future financial health in case the unexpected happens.