Choosing Disability Insurance Companies: 6 Factors to Consider

Each year, 5% of Americans will experience a short-term disability due to illness or injury, leaving them unable to work. In addition, millions of working Americans don’t have adequate disability coverage or enough savings to pay expenses if they’re unable to work.

For these reasons, there is a lot more that goes into choosing disability insurance companies than you realize. It’s essential you know what to look for in the policies they offer to ensure you have enough coverage to meet your financial needs.

Keep reading this guide to learn about six factors you should consider before you choose an insurance company.

Table of Contents

1. Company Reviews and Ratings
2. Customer Service
3. Policy Terms and Conditions
4. Employer Disability Insurance Coverage
5. The Policy’s Definition of a Disability
6. Cost of Premiums

Choosing Disability Insurance Companies

1. Company Reviews and Ratings

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Initially, you’ll want to start your search by reading online reviews to see what people say about their experience with the company you’re considering. Make sure to check their Facebook page and any other social media sites they have.

Next, you’ll want to check independent and third-party review sites. Also, make sure the site you choose is reputable and gives solid and informative reviews. Reputable review sites should include information on the company’s insurance policies, financial track record, and company management.

Some well-known review sites you can start with include:

A.M. Best Company
Moody’s
Standard & Poor’s
Fitch

You can also check out sites like the Better Business Bureau (BBB) and Consumer Affairs.

2. Customer Service

When it comes to insurance, the quality of customer service a company offers is a huge factor. If you ever need to file a claim and have questions about the process, you’ll need to get a response promptly.

Also, you’re not an insurance expert, and you may have specific questions about your coverage that you can’t find online, even if you’re not filing a claim.

One of the best things you can do is call the company’s service line a few times before committing to purchasing a policy. You should also check their website to see what types of customer service options they offer.

Be sure to check for things like:

How quickly you have to wait for a representative
If they seem customer service oriented
If they offer live chat online or on social media after hours
A variety of online services such as claim filing

3. Policy Terms and Conditions

Remember, policies can significantly vary from company to company, and you’ll need to review the insurance terms and conditions carefully. Also, policy premiums can sometimes increase over time while others are locked in.

First, check to see if they offer non-cancelable or guaranteed renewable policies. A non-cancelable policy means the company can’t change your coverage and premiums amounts as long as you pay your premiums on time.

A guaranteed renewal policy requires you to renew the policy each year. It also means the terms of your policy can’t be changed, but the premiums can change after a specific time period.

Other policy terms to look for include:

The length of the waiting period between making a claim and receiving benefits
Additional riders or extra options for coverage you can add to your policy
Length of the benefit period or how long you’ll have coverage if you become disabled

4. Employer Disability Insurance Coverage

You can also check if your employer offers group disability coverage. Many people don’t realize they already have disability coverage along with their other health insurance benefits, so you’ll need to verify this.

It’s a good way to get disability coverage quickly, and it’s easy to sign up through your employer. It’s important to keep in mind employer coverage typically isn’t transferrable, so it will end if you leave your job for any reason.

Although these policies are typically inexpensive, group disability insurance policies usually offer limited coverage. Therefore, finding a second independent insurance policy to address any coverage gaps is a smart idea.

Also, if you run your own business, you can check out this disability insurance for self employed individuals for more affordable coverage options.

5. The Policy’s Definition of a Disability

Believe it or not, there are different ways to define what a disability means, and not every insurance company defines it in the same way.

So, when looking for a disability insurance policy, it’s essential to understand that each policy has its own definition of what qualifies as a disability.

Be sure to read over the policy’s definition of a disability carefully. You’ll want to look for policies that define disability more specifically, such as limiting you from being able to perform your job.

It’s best to avoid policies that broadly define a disability, as it could limit your ability to collect benefits.

6. Cost of Premiums

The cost of premiums is an important consideration, so you’ll want to be diligent in comparing insurance costs. You’ll first need to take into account that the cost of an individual disability policy can vary and greatly depends on things like:

Your age and gender
Your overall health
Your occupation
The length of the benefit period

You also have to factor in the cost of the coverage amount. Most disability policies cover between 60 to 80% of your monthly salary.

You’ll also need to consider the costs for both short-term disability (STD) and long-term disability insurance (LTD). STD policies typically have a shorter waiting period before your benefits start after an illness or injury occurs. STD policies are meant to cover you before LTD policy benefits begin.

Now that you know what to look for, make sure you request multiple quotes from different companies. Your best bet is to find an insurance broker who can shop around for you to find the best policies and rates.