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Disability insurance benefit periods: What to know in 2022

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5 mins
Selecting a disability insurance benefit period is among the most important decisions you need to make when applying for coverage. Here's how to find the ideal option for you.

Many factors determine the premium for your disability insurance policy, including your gender, age, occupation, monthly benefit amount, and the length of the waiting (elimination) period.

Equally important is the length of your policy’s benefit period, which will be explained in this article. Let’s look at what a disability insurance benefit period is, how it works, what your choices of benefit periods are when you apply for your policy, and how to choose the right benefit period.

Read on to learn more.

What is a disability insurance benefit period?

The benefit period of your disability insurance policy is the length of time the insurance company will pay your monthly disability income benefit. You choose your benefit period when you apply for your policy, and it can last months, years, or even decades.

If you become disabled and are approved for benefit payments, once your waiting period ends, you’ll begin receiving a check each month from the insurer. However, those checks will stop coming once you return to work or when your benefit period ends.

How do disability insurance benefit periods work?

When you purchase your disability insurance policy, you’ll be asked to choose a benefit period. The type of disability insurance policy you’re buying, short-term disability insurance or long-term disability insurance, will determine your choices concerning the length of your benefit period.

Benefit period for short-term disability

Because short-term disability insurance is designed to replace your income for a short period of time, the benefit period for short-term disability policies typically lasts for 30 to 180 days. However, a few insurers offer policies with benefit periods of two to three years.

Benefit period for long-term disability

Long-term disability policies are designed to meet your long-term financial needs if you become disabled, so the benefit periods are structured differently than they are for short-term disability policies.

There are multiple benefit periods to choose from for long-term disability insurance policies, including:

  • 2 years
  • 5 years
  • 10 years
  • To age 65
  • To age 67
  • To age 70
  • Retirement age
  • Lifetime

Benefit period options vary by company

Not all insurance companies offer all of these benefit periods, which will vary by insurer.

The insurance company may limit the length of your policy’s benefit period based on your health. For example, if you have a medical condition like diabetes or high cholesterol, the insurer may limit you to a two or five-year benefit period. They may also charge you a higher premium for your policy.

Some companies will allow you to split your benefit period, meaning you can choose one benefit period for disabilities caused by an illness and another for disabilities due to an accident. For example, someone in good health but engaged in a hazardous occupation might choose a five-year benefit period for a disability caused by an illness and a benefit period lasting to age 65 for a disability caused by an accident.

Curious what disability insurance costs? Check your rate here

How to choose the right benefit period for disability insurance

One size doesn’t fit everyone when it comes to the length of the benefit period. There are several factors to consider when you choose your benefit period:

Your amount of liquid assets

Liquid assets refer to cash on hand, cash in bank accounts, assets that can be easily converted into cash (such as stocks, bonds, or money market funds), money in mobile payment accounts like Venmo or PayPal, and certificates of deposit (CDs).

A substantial amount of liquidity gives you more flexibility in choosing your benefit period, whereas limited liquidity may lead you to select a longer benefit period because you don’t have a financial cushion, like a significant emergency fund.

Your risk tolerance

According to the Council for Disability Awareness, the average long-term disability claim lasts 34.6 months. If you’re the type of person who is comfortable “playing the odds,” this statistic could lead you to choose a five-year benefit period and be comfortable with that.

However, if you’re more risk-averse, you may be better off selecting a longer benefit period, like one that lasts until age 65. You’ll pay more, but the peace of mind you’ll have may make it well worth it.

Is a benefit period that lasts until retirement worth it?

In some instances, selecting a benefit period that lasts until retirement age makes good financial sense.

For example, if your occupation is highly specialized and requires a unique skill set, such as a surgeon, a longer benefit period may be a good choice for you. Becoming sick or injured and suffering diminished cognitive function or motor skills could be very costly over your lifetime. A longer benefit period, like age 65, age 67, or retirement age, provides maximum income protection until your Social Security payments begin.

If you have a high-risk job, such as a pilot or construction worker, you could also benefit from a longer benefit period since your chances of becoming permanently disabled are much higher than people engaged in less risky occupations, like someone who spends their days in an office.

Lastly, if you have a substantial amount of debt, such as student loans from medical or law school, a more extended benefit period can help you pay off your debt if you become disabled, keeping your good credit intact. Disabled or not, student loans must be repaid.

Learn More: Disability Insurance Occupation Classes

Does benefit period length affect disability insurance premiums?

Yes, the longer the benefit period you choose, the higher your cost of disability insurance will be. This is because the insurance company’s potential payout amount is greater, which will be reflected in your premiums.

Because most disability claims last less than three years, most people opt for a five-year benefit period. However, you may find that the difference in premiums between a five-year benefit period and one that is longer may not be that substantial. Comparing premiums for all benefit periods before making a selection is advisable.


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.