Long-Term Disability Insurance in New York
Help protect your income when an extended illness or injury prevents you from working
Explore Long-Term Disability Coverage Options
A licensed insurance professional can help you understand your options.
Why Income Protection Matters
Your ability to earn an income is often your most valuable financial asset. According to the Social Security Administration, a 20-year-old worker has roughly a 1-in-4 chance of becoming disabled before reaching retirement age. Long-term disability insurance may help bridge the gap between your savings and the income you need to cover ongoing expenses.
What Is Long-Term Disability Insurance?
Long-term disability (LTD) insurance is a type of coverage designed to replace a portion of your income if you become unable to work for an extended period due to illness, injury, or a medical condition. Unlike short-term disability—which typically covers weeks to a few months—LTD policies may provide benefits for years or potentially until retirement age, depending on the policy terms.
LTD insurance generally replaces approximately 50% to 70% of your pre-disability gross income through regular monthly benefit payments. These payments can help cover essential living expenses such as mortgage or rent, utilities, groceries, and other bills while you focus on recovery.
How LTD Insurance Generally Works:
During the Elimination Period:
- •You may use short-term disability, sick leave, or savings
- •Common elimination periods: 90, 180, or 365 days
- •Longer waiting periods may result in lower premiums
Once Benefits Begin:
- •Monthly benefit payments, typically 50-70% of income
- •Benefits may continue for 2, 5, or 10 years, or to age 65/67
- •Subject to policy terms, conditions, and exclusions
What LTD Policies Typically Cover vs. Common Exclusions
Conditions Typically Covered
- ✓Cancer and related treatments that prevent working
- ✓Heart disease, stroke, and cardiovascular conditions
- ✓Musculoskeletal disorders (back injuries, joint problems)
- ✓Mental health conditions (depression, anxiety — often with benefit limits)
- ✓Neurological conditions (multiple sclerosis, Parkinson's)
- ✓Injuries from accidents (fractures, traumatic brain injury)
- ✓Autoimmune diseases (lupus, rheumatoid arthritis)
- ✓Chronic conditions that impair ability to work
Common Exclusions
- ✗Pre-existing conditions (during look-back period, typically 3-12 months)
- ✗Self-inflicted injuries or attempted suicide
- ✗Injuries sustained while committing a crime
- ✗Disabilities related to substance abuse (varies by policy)
- ✗War or military service-related disabilities
- ✗Normal pregnancy (complications may be covered)
- ✗Work-related injuries (typically covered by workers' compensation)
- ✗Mental health or subjective conditions (benefits often limited to 24 months)
Coverage varies by policy and carrier. Always review actual policy language for specific terms, conditions, and exclusions.
Group vs. Individual Long-Term Disability Insurance
Long-term disability coverage is available through employer-sponsored group plans and individual policies. Understanding the differences can help you evaluate your options:
| Feature | Group LTD | Individual LTD |
|---|---|---|
| Who Pays | Often employer-paid or shared cost | Individual pays full premium |
| Benefit Amount | Typically 50-60% of base salary | May cover up to 60-70% of total income |
| Tax Treatment | Benefits often taxable if employer pays premiums | Benefits typically tax-free if you pay with after-tax dollars |
| Portability | Usually ends when employment ends | Stays with you regardless of employer |
| Underwriting | Often simplified or guaranteed issue | Full medical underwriting typically required |
| Disability Definition | Often own-occupation for 24 months, then any-occupation | May offer true own-occupation for entire benefit period |
| Customization | Limited — standard plan for all employees | Highly customizable riders and features |
| Cost | Generally less expensive per person | Generally more expensive but more comprehensive |
Important: Many financial professionals suggest considering supplemental individual coverage even if you have group LTD through your employer, since group plans may have benefit caps, taxable benefits, and limited disability definitions. Individual policies can help fill potential coverage gaps.
Key LTD Policy Features to Understand
Disability Definition
How a policy defines "disability" is one of the most important features to evaluate:
Own-Occupation
Benefits may be paid if you cannot perform the duties of your specific occupation. A surgeon who can no longer operate but could teach, for example, may still qualify for benefits.
Any-Occupation
Benefits are typically paid only if you cannot perform the duties of any occupation for which you are reasonably qualified by education, training, or experience.
Elimination Period
The waiting period before benefits begin. Common options and their trade-offs:
- •90 days: Most common; may coordinate with short-term disability coverage
- •180 days: Lower premiums; requires more personal savings bridge
- •365 days: Lowest premiums; longest period without LTD benefits
Benefit Period
How long benefits may continue once they begin:
- •2 or 5 years: Shorter benefit periods cost less but offer limited protection
- •To age 65 or 67: Most comprehensive; benefits may continue until Social Security retirement age
- •Lifetime: Rare and typically only for accidents in some policies
Common Optional Riders
Cost-of-Living Adjustment (COLA)
Increases benefits annually (often 3% simple or compound) to help keep pace with inflation during a long-term claim.
Residual / Partial Disability
Provides partial benefits if you can work in a reduced capacity with a corresponding reduction in income.
Future Increase Option
Allows you to increase coverage as your income grows without additional medical underwriting.
Non-Cancelable Guarantee
Carrier cannot cancel or increase your premiums as long as premiums are paid on time.
Understanding Long-Term Disability Insurance Costs
LTD insurance premiums depend on many individual factors. Here are the primary variables that typically influence pricing:
Factors That Influence Cost:
- •Age: Premiums generally increase with age
- •Occupation: Higher-risk jobs typically cost more
- •Health history: Medical underwriting affects individual policy rates
- •Benefit amount: Higher monthly benefits cost more
- •Elimination period: Longer waits generally reduce premiums
- •Benefit period: Longer benefit periods cost more
- •Optional riders: COLA, residual benefits add to premiums
General Cost Ranges:
Individual Policies
Approximately 1% to 3% of annual salary is a common range, though actual costs vary significantly based on individual factors.
Group Policies (Employers)
Group plans are often less expensive per employee due to group purchasing power and simplified underwriting. Rates depend on industry, employee demographics, and plan design.
Note: These are general ranges only. Your actual premium will depend on your specific situation. Contact us for a personalized illustration.
Interested in Long-Term Disability Coverage?
Let us help you compare options and understand what may work for your situation.
How LTD Coordinates with Other Benefits
Long-term disability insurance typically works alongside other income sources. Understanding coordination of benefits is important when evaluating coverage:
Social Security Disability Insurance (SSDI)
Most group LTD policies reduce (offset) benefits by the amount of SSDI received. Since SSDI approval can be a lengthy process and a significant percentage of initial applications are denied, LTD insurance may provide important interim income protection. Some carriers assist with SSDI applications.
Workers' Compensation
Work-related injuries are typically covered by workers' compensation, not LTD. However, LTD policies often include provisions that address the coordination between these benefits if both apply to a claim.
Short-Term Disability (STD)
STD coverage typically pays during the LTD elimination period. In New York, the state-mandated short-term disability benefit provides up to 26 weeks of partial wage replacement for non-work-related illness or injury. Coordinating your LTD elimination period with your STD benefit duration can help avoid gaps in income.
NY Paid Family Leave
New York's Paid Family Leave program provides wage replacement for bonding with a new child, caring for a family member with a serious health condition, or certain military-related situations. PFL and disability benefits generally cannot be collected simultaneously.
Who Should Consider Long-Term Disability Insurance?
Individuals
- •Working professionals who rely on earned income
- •Self-employed individuals without access to group benefits
- •Those with mortgages, dependents, or significant financial obligations
- •Higher-income earners whose group plan may not cover full income
- •Anyone without substantial savings to cover months or years without income
Business Owners / Employers
- •Businesses looking to attract and retain employees with competitive benefits
- •Small business owners protecting their own income
- •Professional firms (medical, legal, accounting) protecting key earners
- •Organizations supplementing existing employee benefits packages
Leading Causes of Long-Term Disability Claims
Understanding what commonly causes long-term disabilities may help illustrate the importance of income protection coverage:
Musculoskeletal Disorders
Back injuries, joint problems, and connective tissue disorders represent a significant portion of LTD claims across industries.
Cancer
Cancer treatment often requires extended time away from work for surgery, chemotherapy, radiation, and recovery.
Mental Health Conditions
Depression, anxiety, and other mental health conditions are among the leading causes of disability claims. Benefits may be limited to 24 months in some policies.
Cardiovascular Disease
Heart attacks, strokes, and other cardiovascular events can lead to extended recovery periods and potential long-term limitations.
Injuries / Accidents
Non-work-related accidents including automobile injuries, falls, and sports injuries can result in months or years of disability.
Neurological Conditions
Multiple sclerosis, Parkinson's disease, and other neurological disorders may cause progressive disability over time.
Frequently Asked Questions About Long-Term Disability Insurance
What does long-term disability insurance cover?
Long-term disability insurance typically provides income replacement—often 50% to 70% of pre-disability earnings—when the policyholder is unable to work due to an extended illness, injury, or medical condition. Benefits generally begin after an elimination period (often 90 to 180 days) and may continue for a set number of years or until retirement age, depending on the policy.
How much does long-term disability insurance cost?
LTD insurance premiums vary widely based on age, occupation, health, benefit amount, elimination period, and policy features. Individual policies may cost approximately 1% to 3% of annual salary. Group policies offered through employers are often less expensive. Actual premiums depend on many individual factors, so we recommend requesting a personalized illustration.
What is the difference between "own occupation" and "any occupation" disability?
Own-occupation disability means you may qualify for benefits if you cannot perform the duties of your specific occupation, even if you could work in another capacity. Any-occupation disability means benefits are typically paid only if you cannot perform the duties of any occupation for which you are reasonably qualified. Many policies use own-occupation for an initial period (often 24 months), then transition to any-occupation.
What is an elimination period in disability insurance?
The elimination period is the waiting period between the onset of disability and when benefit payments begin. Common elimination periods for LTD policies are 90, 180, or 365 days. A longer elimination period generally results in lower premiums. Many people coordinate their elimination period with the duration of their short-term disability coverage so there is no gap in income.
Can I get long-term disability insurance if I am self-employed?
Yes, self-employed individuals can purchase individual long-term disability insurance policies. Individual coverage may be particularly important for the self-employed since they typically do not have access to employer-sponsored group disability benefits. Individual policies can be tailored with specific benefit amounts, elimination periods, and coverage features.
How does LTD insurance coordinate with Social Security Disability?
Most group LTD policies include an offset provision that reduces LTD benefits by the amount received from Social Security Disability Insurance (SSDI). Some individual policies may not have this offset. Since SSDI approval can be a lengthy process and many initial applications are denied, LTD insurance can provide important income protection during the interim period.
Related Coverage Options
Long-term disability insurance is one component of a comprehensive income protection strategy. Consider these related coverages:
Short-Term Disability
NY-mandated coverage providing partial wage replacement for non-work-related illness or injury, typically for up to 26 weeks.
Workers' Compensation
Mandatory coverage for workplace injuries and illnesses in New York. Provides medical benefits and wage replacement for on-the-job incidents.
Life Insurance
Financial protection for dependents and beneficiaries. Often considered alongside disability coverage as part of income protection planning.
Group Health Insurance
Health insurance benefits for employees. Often paired with disability and life insurance as part of a comprehensive employee benefits package.
Important Information
This information is provided for general educational purposes only and does not constitute insurance advice or policy recommendations. Coverage features described are examples and may not be available in all policies or from all carriers. Actual coverage is subject to the terms, conditions, and exclusions of the policy as issued. Tax implications of disability benefits depend on how premiums are paid and other individual factors — consult a qualified tax advisor for guidance. Please consult with a licensed insurance professional to discuss your specific coverage needs and options. Stan Steele Agency is licensed in New York State.
Help Protect Your Most Valuable Asset — Your Income
A disability can happen to anyone. Let us help you explore long-term disability insurance options that may fit your needs and budget.
How We Can Help:
- ✓ Present group and individual LTD options
- ✓ Help you understand policy features and trade-offs
- ✓ Compare coverage from multiple carriers
- ✓ Coordinate with existing benefits (STD, workers' comp)
- ✓ Assist with employer group plan setup
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