Long-term disability (LTD) insurance is coverage that replaces a person’s income if they get hurt or sick and can’t work. Unlike short-term disability insurance, which usually starts replacing income as quickly as two weeks, long-term disability insurance typically kicks in after short-term disability benefits run out. Most long-term plans have a waiting period of 180 days, but some begin as early as 90 days into your documented injury or illness.
About 35% of civilian workers receive long-term disability insurance through their employers (and they often share the cost), so that’s usually the first place to check to see whether you have coverage. But, even if your employer doesn’t offer disability insurance, you can purchase it from a private provider.
We researched nearly two dozen top insurers based on financial stability, consumer reviews, and the depth and breadth of their offerings to choose the best long-term disability insurance companies.
The 6 Best Long-Term Disability Insurance of 2021
Best Overall: Northwestern Mutual
Northwestern Mutual was ranked number-one for long-term disability coverage by S&P Global Market Intelligence based on premiums. That means Northwestern Mutual sells more long-term disability insurance than any other carrier in the U.S.
Northwestern Mutual also holds an A++ rating from AM Best, making it one of the strongest companies on our list financially. The company has been around since 1857, and its incredible longevity and financial strength make it our number one choice for long-term disability insurance.
In addition to its standard disability insurance coverage, Northwestern also offers specialized coverage for doctors and dentists, who tend to be high-earners and may need additional insurance if they lose their incomes. And, Northwestern offers coverage for stay-at-home parents—if a policyholder gets injured or ill and needs to hire help to care for their children as a result, the policy pays for it. These are offerings we did not find with every carrier, further setting Northwestern Mutual apart.
Northwestern has an A+ rating with the Better Business Bureau. However, the company is not accredited with the BBB.
Runner-Up, Best Overall: Guardian Life
uardian Life is a large insurance company that underwrites its disability policies through Berkshire Life Insurance Company of America, another large insurer that has an A++ rating from AM Best. Guardian itself has been In business since 1860 and is a renowned name in both life insurance and disability coverage, with $8.5 billion in capital and $1.6 billion in operating income.
One of the great benefits of disability insurance from Guardian is the company’s “own occupation” coverage. That type of disability coverage is great because it means your policy will replace a portion of your income if you can’t remain employed in your regular job or career, even if you’d be capable of doing other forms of work. Guardian writes policies for terms ranging from two to 20 years and offers disability coverage up to age 65 (or older depending on your policy).
Its financial stability, reputation for stellar service, and the ability to get a quick quote online put Guardian on our list as runner-up for best long-term disability companies. The two biggest drawbacks are that the company doesn’t write as much disability coverage as Northwestern and that some of its coverage is underwritten by Berkshire Hathaway, rather than internally.
Most Affordable: Breeze
With plans starting at just $9 per month, Breeze stands out as the most affordable long-term disability insurance on our list. Underwritten by Assurity Life Insurance Company, Breeze’s online-only quote system is just that—a breeze. The company makes it easy to write your policy in as little as 15 minutes.
In fact, if you meet certain criteria for age and benefit levels, you might not even need a medical exam. For instance, if you are under 50, you won’t need an exam unless your policy is worth more than $4,000 per month. However, those policyholders ages 56 to 60 require an exam if their coverage exceeds just $1,500 per month. As long as you write your policy before the age of 62, you can renew it up to age 67.
Assurity’s A- rating with AM Best and its history of excellence are testaments to the company’s financial strength.However, Breeze is a newcomer to the market. The company already has an A+ rating with the Better Business Bureau but is not yet accredited. For the company’s customer service, low prices, and quick online quotes, Breeze is the only insurtech firm on our list of best long-term disability insurance companies.
Best Service: MassMutual
Earning the title for best service on both our Best Short-Term Disability Companies list and on this list for long-term disability insurance, MassMutual has a superior track record for customer service. It has been in business since 1851, a testament to its financial strength. Mass Mutual also has an A++ rating from AM Best, which should give policyholders peace of mind that it can pay claims when they're made.
In addition to garnering positive customer reviews, MassMutual provides a wealth of financial resources and information on its website, which showcases how much it cares about its customers. The disability income (DI) insurance calculator can help you decide how much coverage you need. MassMutual’s long-term disability insurance offerings compare favorably to the other top providers on this list.
The company offers benefit periods of two, five, or 10 years, up to the ages of 65 or 67, depending on your policy. Waiting periods start at 60 days, and coverage is fully portable, meaning you can take your policy with you even if you switch employers.
Best for Small Business Owners or Self-Employed: Assurity
Long-term disability becomes even more important if you’re self-employed. After all, your business might not withstand your loss for several months—or even years. Having a long-term disability policy in place ensures you’ll receive income even if your business or freelance work isn’t earning money.
We selected Assurity as best for small business owners or self-employed individuals due to the high coverage limits and depth of options for business owners. Disability insurance from Assurity is also available through Breeze, a top-rated insurtech firm. However, coverage options may be limited for self-employed individuals.
Assurity, on the other hand, lets you bundle other business insurance coverage with your long-term disability policy. These options, along with high coverage limits, could make it an ideal choice for high-earning entrepreneurs.
Assurity offers benefit periods of one, two, five, or 10 years, and you can renew your policy up until age 67. Coverage amounts range from $500 to $20,000 per month, making it perfect even for high-earning business owners and solo-preneurs. Your Assurity policy for business owners, or business overhead expense (BOE) coverage, will even pay for your lease, payroll, and company-related expenses if you are unable to work. This puts it at the top of our list for the best long-term disability insurance for business owners or self-employed individuals.
Best for Coverage Options: Mutual of Omaha
Mutual of Omaha, founded in 1909, has an A+ rating from AM Best and has been accredited by the Better Business Bureau with an A+ rating since 1940. Its stellar reputation for service plus its flexible options for long-term disability coverage puts it on our list of best companies for DI insurance coverage options.
Monthly benefits can extend to $12,000, depending on your salary. Policies are renewable up to age 67 and are portable, which means your policy remains in force if you change jobs, as long as you continue paying the premiums. You can get partial benefits if you’re able to work part-time, and you may qualify for additional benefits.
Some of the optional benefit riders include a Hospital Confinement Indemnity Benefits Rider, which pays up to $500 per day if you’re hospitalized and up to $1,000 if you’re in an intensive care unit. The Return of Premium Benefit Rider gives back up to 80% of your premiums, minus claims paid, after 10 years. If other companies offer these value-added riders, they aren’t readily advertised, putting Mutual of Omaha at the top of our list for DI policy coverage options.
What Is Long-Term Disability Insurance?
Long-term disability insurance companies provide you income to live on should you become seriously ill or injured, usually for a period of six months or more. As with other insurance policies, you pay into your insurance through premiums, and the insurance company pays your benefits when you file a valid claim.
Short- vs. Long-Term Disability Insurance
Long-term disability benefits can last for as long as 10 years. So if you are permanently injured or battling an illness, your long-term disability insurance can supplement your Social Security disability insurance, enabling you to maintain the quality of life you had before your illness or injury.
Short-term disability, on the other hand, is designed to give you enough money to live on until you recover or until long-term DI insurance kicks in.
What Does Long-Term Disability Insurance Typically Include?
Long-term disability pays a portion of your salary or the full amount of your lost income, depending on your policy. Some policies, like Mutual of Omaha, may also provide:
- Additional funds for hospitalization
- Lump-sum payout if you die while disabled
- Additional funds to cover inflation while you’re disabled
- Lump-sum payout for a critical illness
- Medical expense reimbursement for accidents
- Rehabilitation services
What Does Long-Term Disability Insurance Typically Exclude?
As with short-term disability, long-term disability does not include injuries sustained on the job; workers’ compensation should pay these claims. Long-term disability insurance sometimes has more exclusions, or limitations, than short-term disability policies. Exclusions for DI insurance may include:
- Pre-existing conditions
- Mental limitations (If your disability is caused by a condition classified in the Diagnostic and Statistical Manual of Mental Disorders, benefit payments may be limited to two years. These conditions may include depression, anxiety, stress, and dementia.)
- Alcohol and substance abuse
- Acts of war
- Suicide attempts
There are also time exclusions for long-term disability insurance. Typically, coverage won’t kick in until you’ve been out of work for six months. Benefits may expire after 24 months, but some policies have coverage terms of up to 10 years.
What Are the Typical Costs of Long-Term Disability Insurance?
Long-term disability insurance costs vary based on the salary you’re looking to replace if you get injured or become ill. Other factors, including your age, gender, and occupation, also affect your rate. For full income replacement, you can expect to pay between 1% and 4% of your annual income. If you make $50,000 a year, you may be able to get a policy for as little as $500 per year, or $41 a month, which is less than $2 a day.
Is Long-Term Disability Insurance Worth It?
Along with life insurance, long-term disability insurance offers the best value you can find in an insurance policy. Look for a policy that offers “own occupation” coverage, which means that if you can’t work in your chosen field, even if you’d be capable of doing other forms of work, you can file a claim. Filing for long-term disability is often a better option than dipping into your emergency funds or retirement savings. The money you receive from LTD is a tax-free benefit unless you’re paying premiums through your employer with pre-tax dollars. In other words, you do not have to pay taxes on your DI benefits checks, unless you purchased the policy through your workplace and pay for premiums with pre-tax dollars deducted directly from your paycheck.
Do I Need DI Insurance If My Employer Provides Workers’ Comp?
Worker's compensation is a state-mandated, employer-funded benefit required for most employers in all states except for Texas, but it does not replace long-term disability coverage. Workers' compensation only covers work-related injuries or illnesses, which typically occur at the workplace.
LTD, on the other hand, can cover injuries or illnesses that occur outside of work or on the job. Unless the injury clearly happened at work, it can be easier to use your LTD benefits than trying to prove your workers’ comp case in court.
How We Chose the Best Long-Term Disability Insurance Companies
We reviewed about two dozen of the most well-known—and some newer—DI insurance companies to find the best for private, long-term disability coverage. We evaluated their financial strength, policy flexibility, and customer service, as well as pricing estimates, where available, to find the best options for your needs.
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A.M. Best. "Assurity Life Insurance Company." Accessed December 29, 2020.
Better Business Bureau. “Breeze Financial & Insurance Services Group.” Accessed December 29, 2020.
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AM Best. "AM Best Affirms Credit Ratings of Mutual of Omaha Insurance Company and Its Subsidiaries." Accessed December 29, 2020.
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