Disability insurance is something every working person needs to have. Unfortunately, it's often misunderstood and overlooked until it's too late. In light of the global COVID-19 outbreak, we would like to set the record straight.

Although unemployment claims are rapidly rising, there are many more people that are still gainfully employed (and likely working from home). Those who are not covered by an individual or employer-sponsored long term disability insurance plan are at risk of suffering a major financial setback if they become disabled.

For those who are fortunate enough to be healthy and employed in these uncertain times, it’s not too late to apply for disability insurance. But questions abound concerning eligibility, benefits, cost, and other areas regarding disability insurance in the age of COVID-19. Here, we answer the most frequently asked questions about disability insurance and the novel coronavirus.

Q: Does disability insurance cover COVID-19?

A: Disability insurance provides income protection for injuries and illnesses, such as COVID-19, that prevent you from working in your occupation.

So, for the sake of illustration, say you currently have a disability insurance policy in force. Today, you learn that you have tested positive for COVID-19. This means you may be able to receive benefits from your insurance carrier. It doesn't matter if the policy went into force 5 years ago, 5 months ago, or 5 days ago. As long as your policy was put in-force beforehand, you may be eligible to receive benefits.

By having a plan in place in advance, you have given yourself a chance to replace a portion of your income that you would not have access to otherwise. But simply experiencing a disabling condition, whether it is COVID-19 or arthritis or back pain, does not automatically mean you will receive benefits. You still need to prove it meets your policy's definition of disability.

Ultimately, if you file a claim for benefits and your claim is approved, the insurance company would begin to pay you the monthly benefit amount specified in your policy.

Q: If I contract coronavirus, when would I begin receiving benefits?

A: If your claim for disability insurance benefits is approved, you will begin receiving your monthly benefit amount after your policy's elimination period ends.

In other words, it states how long you must wait after you experience your disabling event to begin receiving benefits. An elimination period is similar to a deductible in a health insurance plan in that it must be satisfied before benefits commence.

Typically, waiting periods can range anywhere from 30 to 180 days, with 90 days being the most common (and cost-effective) choice.

Q: Can I get covered if I have a pre-existing condition that puts me at a higher risk to contract COVID-19?

A: For potential applicants with pre-existing conditions, the good news is you can still qualify for coverage if you are employed. The bad news is your pre-existing condition will most likely be excluded from the policy.

Every application for disability insurance must go through an underwriting process. This includes reviewing your medical history in order to determine your risk of filing a claim and make a final decision about your insurability.

Whether or not you get approved depends upon your personal health history. Insurance companies are very risk-averse. So while the insurer may not cover your pre-existing condition, it may still cover you for COVID-19 if you can contract it in the future.

[ Read: Disability insurance & pre-existing conditions, explained ]

Q: Do I have to keep paying premiums if I become disabled due to coronavirus?

A: No, you do not keep making your monthly payments if you become disabled and are unable to work. The premiums are then waived for as long as you remain disabled and receive monthly benefits.

In turn, the benefits you receive are basically tax-free income. They can be used to pay bills, put food on the table --- pretty much whatever you need to maintain your lifestyle while you recover.

Q: When is the best time to apply for disability insurance?

A: The best time to apply for disability insurance is when you’re healthy and employed.

You cannot wait until you have become disabled to apply for individual coverage. At that point, your only option remaining is Social Security Disability Insurance.

Before a claim for disability insurance benefits is paid by the insurer, your medical records will be reviewed and very likely will show when your symptoms began to appear.

Apply as soon as possible so you can have the peace of mind that you’ll have a check coming each month if you do get sick.

We are here to help

These are just a handful of the questions being asked about COVID-19 and disability insurance. Misinformation and conjecture are certain to happen during this pandemic. If you’d like to have your disability insurance questions answered, please give us a call at (402) 256-5230 to speak with a disability insurance expert. We’ll be happy to answer any questions you have and talk with you about your coverage options.


Jack Wolstenholm is the head of content at Breeze.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

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