About 25% of 20 year olds could become disabled before reaching retirement age.
That prediction is from the Social Security Administration, which added that these adults would be entitled to its disabled worker benefits. While Social Security benefits can help, the average monthly amount for a disabled worker is $1,634, according to the administration.
That may be a large gap relative to a person's income, and where disability insurance can help. This kind of coverage replaces between 40% and 70% of your income, depending on your policy, if you're sidelined from working.
Below, CNBC Select looks at the top long-term disability insurance companies based cost, availability, customer service and available options. (For more details on how we made our picks, read our methodology.)
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Best disability insurance companies
Best for customer satisfaction: Guardian
Guardian® Disability Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
Guardian® is a reputable insurance company that has a variety of disability insurance options. Benefit period options range from two years to age 70. A number of riders are also available to customize your policy.
Pros
- Highly rated for financial strength
- Very low NAIC complaint index
- Quotes available online
Cons
- Policies must be purchased through a specialist
Who's this for? Guardian is a top-ranking provider in J.D. Power's U.S. Individual Life Insurance Study and has a very low complaint volume, as reported by the National Association of Insurance Commissioners.
Standout benefits: No-exam policies are available for up to $3 million.
Best for comparison shopping: Breeze
Breeze Disability Insurance
Policy highlights
Online policy broker Breeze allows you to compare rates for short- and long-term disability from Guardian, Mutual of Omaha, Assurity, Ameritas, Principal, MassMutual and other top providers.
Age
Varies by insurer
Benefits period
Varies by insurer
Maximum monthly benefits
Varies by insurer
Elimination period
Varies by insurer
Pros
- Allows you to compare policies from top companies
- Can get approval completely online
Cons
- Not available in New York state
Who's this for? Breeze is for consumers who want to compare rates online without contacting an agent. You can fill out a single online form and get price quotes from several companies within 24 hours.
Standout benefits: Breeze works with top insurers, including some on our list, like Mutual of Omaha, Guardian, The Standard, Assurity and Principal.
Best for no medical exam: Assurity
Assurity Disability Insurance
Cost
The best way to estimate your costs is to request a quote
App available
No
Policy highlights
Assurity's disability insurance offers many built-in benefits, including a waiver of premium and coverage for home modifications in the event of a total disability, and things like occupational rehabilitation to help you get back to work. Assurity also offers a variety of riders that can help you fit your policy to your needs.
Pros
- 10 riders available to customize your policy
- Medical exams and income verification not required for benefit amounts up to $6,000 for qualifying applicants between ages 18 to 55.
Cons
- Quotes not available online
Who's this for? Assurity doesn't require medical exams for policies that pay out less than $6,000 a month, allowing you to skip things like blood tests and get coverage easily.
Standout benefits: Assurity covers a wide range of occupations, including nurses, tradespeople and real estate agents.
Best for families: The Standard
The Standard Disability Insurance
Cost
The best way to estimate your costs is to request a quote
App available
No
Policy highlights
The Standard offers coverage that can protect your income if you're faced with a disability. In addition to features like guaranteed renewability, rehabilitation benefits and optional student loan coverage, The Standard's disability insurance offers a family care benefit to help you take care of a child, spouse or parent with a serious illness or injury.
Pros
- Several flexible riders can cover things like student loan payments
Cons
- Quotes not available online
Who's this for? In addition to traditional disability insurance coverage for you, The Standard offers a family care benefit if you need to decrease your work hours to care for an injured or ill loved one.
Standout benefits: The Standard offers a variety of riders, including one that pays for student loans if you can't work. The residual disability rider replaces a portion of your income if you take a role outside your previous industry and aren't earning as much as you used to.
Best for customization: Mutual of Omaha
Mutual of Omaha Mutual Income Solutions
Cost
The best way to estimate your costs is to request a quote
App available
No
Policy highlights
Mutual of Omaha's disability insurance offers a wide range of options, from the type of policy you choose to your choice of two no-cost benefits and nine riders.
Pros
- Variety of options to tailor your policy to your needs
Cons
- Quotes not available online
Who's this for? Mutual of Omaha's disability insurance policies have a variety of benefit periods, maximum monthly benefits, and elimination periods, allowing you to adjust these policy features to lower the premium.
Standout benefits: Built-in benefits include a waiver of your elimination period if you face a recurring disability within six months and coverage for rehabilitation services while receiving benefits. The optional automatic increase benefit can boost your monthly benefit by 4% annually, helping you keep pace with inflation.
What is disability insurance and what does it cover?
Bills don't stop coming when you're injured or suffer a serious illness. Disability insurance can help you stay afloat with regular benefits, typically between 40% and 70% of your standard salary.
Short-term disability
Short-term disability is meant to cover a temporary health setback, from outside-of-work accidents to pregnancy complications. Usually lasting between three months and a year, short-term disability is typically provided by an employer — some states have made it mandatory for employers. It's also available from private insurers if you don't have access to a policy through your job.
Long-term disability
Long-term disability insurance replaces your income if you're sidelined for a number of years or the remainder of your life. Policies replace 40% to 70% of your income and can keep paying out well into your 60s, helping you until Social Security retirement benefits kick in.
While some employers also offer long-term disability insurance, a private plan is portable and provides a broader choice of a larger monthly benefit.
How much is disability insurance?
A long-term disability insurance policy from a private insurer typically costs about 1% to 3% of your salary per year, according to life and disability insurance advocacy group Life Happens.
That means that a person who makes $100,000 per year could reasonably expect to pay about $1,000 to $3,000 per year for their disability insurance coverage.
Outside of your income, prices can also vary by your age, health history, occupation, and the elimination period and benefit amount you choose.
Pros and cons of disability insurance
- Can help you maintain your lifestyle if you're unable to work for months or years due to an illness
- Available for a wide variety of professions
- Can be another cost to add to your monthly bills
- May never pay out if you're never disabled
Disability insurance FAQs
Is disability insurance worth it?
If your family depends on your ability to earn a living, disability insurance can help ensure that you'll be able to continue working toward your goals and maintain your lifestyle if you're disabled during your working years.
How much is disability insurance?
Long-term disability insurance typically costs between 1% and 3% of your income. For example, a person earning $100,000 per year would spend approximately $83 to $250 per month for disability coverage. The benefit amount, period, and elimination period can influence the cost of your coverage, as can your age, health status and specific occupation.
How much disability insurance do I need?
The amount of disability insurance you need depends on your monthly income and how much other coverage you may have through work. You may also want to consider how much in savings you have.
For a general idea of what you'll need, start by adding up your monthly bills. Then, add up how much income you'd continue to receive if you were disabled, such as benefits from workplace disability coverage or investment income. Subtract your monthly bills from the money you'd continue to receive, and that figure is the amount you'd need to receive each month in disability insurance benefits.
Are disability insurance benefits taxed?
Disability insurance benefits aren't taxed if you buy them with post-tax dollars. In the case of a private disability insurance policy, benefits would not be taxable.
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Why trust CNBC Select?
At CNBC Select, our mission is to deliver high-quality service journalism and comprehensive consumer advice to our readers, enabling them to make informed financial decisions. Every insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. To research the best disability insurance companies, we compiled dozens of data points on several top disability insurance companies. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content independently of our commercial team and any outside third parties, and we pride ourselves on maintaining high journalistic standards and ethics.
Our methodology
CNBC Select compared top disability insurance companies based on their policies, benefit periods, maximum monthly payouts and elimination periods.
When narrowing down our choices, we also considered a company's unique features, the number of riders available and its reputation for customer service.
Financial strength ratings from A.M. Best and complaint volume from the National Association of Insurance Commissioners (NAIC) were also incorporated.
We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
Based on these criteria, our picks for the best disability insurance companies are:
- Best for customer satisfaction: Guardian
- Best for comparison shopping: Breeze
- Best for no medical exam: Assurity
- Best for families: The Standard
- Best for customization: Mutual of Omaha
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