How to Review a Long-Term Disability Income Insurance Policy

Making Sure Your Safety Net is Strong Enough

Your ability to earn an income is one of your most important assets—and long-term disability (LTD) insurance is designed to protect it. But not all disability policies are created equal. If you already have a policy (or are considering one), a thoughtful review can help you avoid costly gaps in coverage and make sure the benefits actually support your lifestyle if you ever need them.

Here’s what to look for when reviewing your long-term disability income insurance policy:

1. Definition of Disability: The Heart of the Policy

How the policy defines “disability” determines whether or not you’ll qualify for benefits.

Own-Occupation: Pays if you can’t perform your specific job or specialty—even if you can work in another role.
Any-Occupation: Only pays if you can’t work any reasonable job based on your education and experience.
Modified Own-Occupation: A hybrid that may reduce or eliminate benefits if you take another job.

👉 Tip: Own-occupation is ideal—especially for professionals and specialists. Check how long this definition applies.

2. Monthly Benefit Amount

Your policy should replace 60–70% of your gross income. Review:

The maximum monthly benefit you’re eligible to receive.
Whether benefits are taxable (often the case with employer-paid plans).
If the amount still reflects your current earnings—especially if you’ve had promotions or income growth.

👉 Tip: If your income has increased since you bought your policy, you may need a benefit increase rider or a new supplemental policy.

3. Elimination Period (Waiting Period)

This is the time you must wait after becoming disabled before benefits begin—usually 90, 180, or 365 days.

Shorter waiting period = faster benefits, but higher premiums.
Longer waiting period = lower premiums, but more out-of-pocket risk.

👉 Tip: Make sure you have enough savings to cover your expenses during the elimination period.

4. Benefit Period

This is how long the policy will pay you once you're disabled.

Typical durations: 2 years, 5 years, to age 65, or even lifetime.
Policies that pay to retirement age offer stronger long-term protection.

👉 Tip: If you're young, a longer benefit period is especially important—it protects decades of potential earnings.

5. Residual/Partial Disability Benefits

This allows you to receive partial benefits if you can work part-time or in a reduced capacity.

Essential for conditions where recovery is gradual or partial.
Without this rider, you may get nothing unless you're totally disabled.

👉 Tip: Look for strong language around partial or residual disability benefits—not just “all or nothing” coverage.

6. Policy Riders & Enhancements

Future Increase Option (FIO): Lets you increase your coverage as income rises, without new medical underwriting.
Cost-of-Living Adjustment (COLA): Increases benefits annually to keep pace with inflation during a claim.
Catastrophic Disability Rider: Pays more if you're severely impaired (e.g., can't perform daily living activities).

👉 Tip: Riders make your policy more expensive—but often more valuable in a real-life claim.

7. Renewability & Portability

Non-Cancelable and Guaranteed Renewable: The insurer can’t change terms or raise your rates.
Group vs. Individual Policy: Employer group policies may not be portable if you leave your job.

👉 Tip: Individual policies are stronger—especially if you’re self-employed or planning to switch jobs.

Final Thoughts

A long-term disability policy is not “set it and forget it.” Income, lifestyle, and career paths change. Reviewing your policy every few years—or after major life changes—helps ensure your financial safety net still fits your life.

Need a Second Set of Eyes? BC Brokerage helps professionals review and optimize disability income policies—whether they’re employer-sponsored or private. Reach out today for a complimentary policy review.