Three Squares And A Star Management Group, LLC

Disability Insurance

A disability insurance policy pays a monthly benefit in the event of a disability. The monthly benefit amount can be used to replace income lost as a result of the disability, help to meet ongoing financial obligations, and possibly continue to maintain financial goals.

What Type of Disabilities Might You Face?

Most people think something like a car accident, heart attack or on the job injury that would quickly render them totally and completely unable to work. In reality, disabilities are caused by accidents and illnesses from minor to severe - from headaches to cancer and everything in between.

Some disabilities are sudden and serious, while others are milder, only slightly impacting one’s ability to work. Other disabilities develop slowly and worsen over time. No one can know in advance, so it’s best to be prepared with disability insurance.

Definition of Disability

When comparing policies, the definition of disability can make all the difference in the amount of protection offered. You should look for a policy with a definition of total disability that focuses on your ability (or inability) to do the duties of your occupation - the job you were doing when you became disabled. This is in contrast to some definitions which look at your ability to do any job or occupation. Depending on the circumstances of your disability, it could be more difficult to qualify for benefits with that type of policy.

It’s also important to look for a policy that pays for partial disability as well as total disability. A disability insurance policy that has partial disability protection allows you to collect benefits even while working part-time.

Types of Disability Insurance

Short-Term Disability (STD)

Short-Term Disability policies (STD) have a waiting period of 0 to 14 days with a maximum benefit period of no longer than two years.

Long-Term Disability (LTD)

Long-Term Disability policies (LTD) have a waiting period of several weeks to several months with a maximum benefit period ranging from a few years to the rest of your life.

Disability Policy Protection Features

Disability policies have two different protection features that are important to understand.


Non-cancelable means the policy cannot be canceled by the insurance company, except for nonpayment of premiums. This gives you the right to renew the policy every year without an increase in the premium or a reduction in benefits.

Guaranteed Renewable

Guaranteed renewable gives you the right to renew the policy with the same benefits and not have the policy canceled by the company. However, your insurer has the right to increase your premiums as long as it does so for all other policyholders in the same rating class as you.

Traditional Disability Policy Options

Additional Purchase Options

Your insurance company gives you the right to buy additional insurance at a later time for an additional cost.

Coordination of Benefits

The amount of benefits you receive from your insurance company is dependent on other benefits you receive because of your disability. Your policy specifies a target amount you will receive from all the policies combined, so this policy will make up the difference not paid by other policies.

Cost Of Living Adjustment (COLA)

The COLA increases your disability benefits over time based on the increased cost of living measured by the Consumer Price Index. You will pay a higher premium if you select the COLA.

Residual or Partial Disability Rider

This provision allows you to return to work part-time, collect part of your salary and receive a partial disability payment if you are still partially disabled.

Return of Premium

This provision requires the insurance company to refund part of your premium if no claims are made for a specific period of time declared in the policy.

Waiver of Premium Provision

This clause means that you do not have to pay premiums on the policy after you’re disabled for 90 days.


Beginning Date

This is the period of time you must remain disabled before being eligible to receive benefits. Since long-term disability income insurance policies are intended to provide benefits for longer-lasting disabilities, most specify at least a 3 month beginning date or waiting period.

  • Longer beginning dates are less expensive than shorter beginning dates, but,
  • The longer you wait to receive benefits, the more likely it is you will need to use savings to meet your financial obligations.
  • Most individual disability income insurance policies are issued with a 91 day beginning date.
Benefit Period

This is the length of time you would continue to receive benefits for an ongoing disability. Benefit periods of different lengths are often available.

  • Longer benefit periods are more expensive than shorter benefit periods, but,
  • Longer benefit periods provide better financial protection against a long-term disability.
  • Most disability insurance policies are issued with a To Age 65 or To Age 70 benefit period and provide benefits until likely retirement age.