Disability Insurance: What's Covered and What Isn't

It's defined by your policy, not by a general standard. Most long-term disability policies pay when illness or injury prevents you from performing the material duties of your job (or, in weaker policies, any job you're suited for) and you meet the elimination period. Both illnesses and injuries qualify — in fact, illnesses cause the majority of long-term disability claims, not accidents. Read your policy's exact definition, because it controls everything.

It's the most important distinction in disability insurance. An 'own-occupation' policy pays if you can't perform your specific occupation, even if you could do another job — best for specialized, high-earning careers. An 'any-occupation' policy only pays if you can't do any job you're reasonably suited for by education and experience, which is a much harder bar. Own-occupation costs more but protects your income far better.

A normal pregnancy and routine delivery are generally treated as covered only if you're disabled beyond the elimination period, which a typical maternity leave may not exceed — so short-term disability is where most pregnancy benefits appear. Complications that extend your inability to work can be covered. Coverage varies, and a pregnancy you're already aware of may be treated as pre-existing on a new policy, so check timing and terms carefully.

Often, but frequently with limits. Many policies cover disabilities from mental-health or substance-use conditions but cap those benefits at a shorter period (commonly 24 months) than physical conditions, which may pay to retirement age. If mental-health parity matters to you, look for a policy without a mental/nervous limitation, and read that clause specifically.

It's the waiting period between when your disability begins and when benefits start — essentially a time-based deductible. Long-term disability elimination periods commonly run 90 or 180 days; a longer elimination period lowers your premium but means you need savings or short-term coverage to bridge the gap. Choose one you can actually afford to wait out.

It depends on who paid the premium. If you pay the premium with after-tax dollars (typical for individual policies), benefits are generally tax-free. If your employer pays the premium (common for group coverage) and it wasn't taxed to you, benefits are usually taxable. This is why an individual policy targeting ~60% of income can effectively replace close to your take-home pay. Confirm your situation with a tax professional.

Often not. Group long-term disability typically replaces about 60% of base salary (excluding bonuses and commissions), can be taxable if the employer pays, isn't portable when you change jobs, and may use a weaker any-occupation definition after a couple of years. Many professionals layer an individual, portable policy on top to close the gap and lock in stronger terms.