What type of long-term disability insurance should I buy?

There are two main ways you can purchase long-term disability insurance polices:

• Group Insurance: Long-term disability insurance provided by or purchased through your employer.
  
  
• Individual Insurance: Long-term disability insurance coverage you purchase on your own.

The most important consideration when choosing a long-term disability insurance plan is to understand the meaning of the terms "disability" and "disabled" in the policy definitions.

There are three major types of individual long-term disability policies:

1. Conditionally Renewable Policies: The insurer has to option to cancel or renew the policy, as well as to raise premiums.
   
   
2. Non-Cancelable Policy: This type of policy fixes your premiums over the term of the policy, and restricts the insurer from decreasing benefits or canceling the policy.
   
   
3. Guaranteed Renewable Policy: your premiums can be raised so long as the change affects an entire category of occupations, policyholders, etc.
   

The best type of long-term disability insurance coverage you can purchases is both non-cancelable and guaranteed renewable. This means that the insurance company cannot change policy terms or cancel your policy without your consent. Additionally, as long as you pay your premiums on time, the insurer cannot raise your premiums for the life of the policy. Unfortunately, because the insurer cannot raise premiums or reduce coverage, non-cancelable and guaranteed renewable policies are usually only offered to low-risk occupational groups at a high premium.

More Insurance and Legal FAQs:

• All Disability Insurance FAQs
• All Insurance and Legal FAQs