I’m in the midst of what may be the world’s longest search for long term disability (LTD) insurance. I’ve been thinking about this for months and, though I have coverage through work, I made picking up a individual LTD policy one of my goals for 2008. Unfortunately, I’ve made virtually no progress on this.
Over the weekend I started digging around for information again, and I ran across a nice compilation of tips courtesy of the Federal Citizen Information Center — you know, the good folks in Pueblo, CO.
Examine how the policy defines disability. Some policies only pay if you can’t work in any occupation, whereas others pay if you can’t work in your own occupation. The latter is obviously better.
Ask for outlines of coverage so you can compare across policies. Compare the definition of disability (above), benefit amount, length of waiting period, length of benefit period, benefits for partial disability, cost-of-living adjustments, etc.
Check that the company and agent are licensed in your state. If you’re unsure, contact your state’s insurance department.
Look for a company that is reputable and financially strong. Ratings agencies include:
Fill out your application accurately. Don’t withhold information or lie about your health. The insurer might refuse to honor your policy if you’re dishonest or provide incomplete information.
Read your policy carefully. Once you know what you want/need, it’s important to make sure that the policy that you’re considering offers the sort of coverage that you’re looking for.
Shop around and compare costs. LTD insurance is typically sold individually through insurance agents, or through group policies which may be available from your employer or professional organizations. Costs and coverage levels vary.
Finally, when you decide to purchase a policy, make your check payable to the insurance company and get proof of payment. Also be sure to check the date that the insurance becomes effective.
In addition to these tips, you might be interested in the CIC’s handy LTD insurance checklist.