How Long Should Your Disability Insurance Pay Benefits? The Answer Depends on Your Situation.
The benefit period determines how long you receive disability income. A 2-year benefit period costs less but leaves you exposed. Here is how to choose the right benefit period.
The benefit period is one of the most important decisions in disability insurance. It determines how long you receive benefits if you become disabled. The wrong choice can leave you financially exposed when you need protection most.
Common Benefit Period Options
Disability insurance benefit periods typically range from 2 years to age 65 (or age 67). Common options include: 2 years, 5 years, 10 years, to age 65, and to age 67. Longer benefit periods cost more in premium.
The Average Disability Duration
The average long-term disability claim lasts 31.6 months — nearly 3 years. A 2-year benefit period would cover the average claim. But 30% of long-term disability claims last more than 5 years. For those people, a 2-year benefit period is catastrophically insufficient.
To Age 65 vs To Age 67
Most disability insurance policies pay benefits to age 65. Some offer coverage to age 67, matching the Social Security full retirement age. The cost difference is modest. If you plan to work until 67, the to-age-67 benefit period is worth the extra premium.
Short-Term vs Long-Term Disability
Short-term disability insurance has a short benefit period (3-6 months) and a short elimination period (0-14 days). Long-term disability insurance has a long benefit period (to age 65) and a longer elimination period (90 days). Most people need both.
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