Disability Insurance for Nurses: 2024 Guide

Nursing and the medical field at large has been steadily growing due to healthcare shortages and the ability to earn high wages, but the cruel irony of life is that sometimes the nation’s caregivers become infirm due to workplace injuries, freak accidents, sudden illness, or unexpected disability.

In these cases, disability insurance is an essential safety net for nurses, so that they can continue to count on their income to cover their living expenses, support their families, and save for the future.

What Is Disability Insurance for Nurses?

Disability insurance is an insurance product designed to replace some of the policyholder’s income if they cannot work due to an injury or disability.

In a sense, it could more accurately be described as income insurance because it allows individuals to still bring in a weekly or monthly paycheck while they’re out of work.

Many young Americans don’t purchase disability insurance––even though it’s a common full-time employment benefit––because they erroneously assume their health and vitality will carry them through to retirement.

However, the CDC reports that 1 in 4 Americans suffers from some form of disability. Disability is unpredictable and it can happen to anyone, so it’s important to financially prepare yourself in the event that you can’t earn an income for any period of time.

It’s especially important for high-earning professionals, like nurses, to consider disability insurance if they’re the breadwinner in their family or provider for other loved ones.

If your employer offers disability insurance coverage, it’s important to confirm the extent of coverage and that you’re enrolled annually.

Even if you have employer-provided disability insurance, there’s a good chance the policy has limits that may not be imposed on you if you had an individual plan.

Supplemental disability insurance ensures you and your loved ones are financially protected in the event of an accident, illness, or injury that leaves you unable to work for an extended period of time.

Types of Disability Insurance Coverage

Disability insurance coverage varies based on the type of policy.

  • Short-term disability is designed for temporary injuries where a worker needs time to recover before returning to work. This type of disability insurance typically maxes out around 6 months. It is usually provided as an employment benefit or group plan.
  • Long-term disability is designed for illnesses and injuries that last more than 6 months. In some cases, it can be used for permanent disabilities. Recipients of long-term disability benefits can often continue collecting benefits until retirement. This type of insurance often needs to be purchased as an individual policy from a broker, especially if you’re a high-income earner or self-employed.
  • SSDI pays out to American taxpayers who have worked at least 10 years in a job covered by Social Security. It has rigorous eligibility requirements and typically has lower benefit amounts than private insurance carriers.

How Much Does Disability Insurance Cover?

Both short-term and long-term disability insurance will replace 50–80% of your income during the period you’re out of work whereas Social Security Disability Insurance (SSDI) is a government-sponsored program with its own terms and benefit calculations.

Your monthly benefit will be calculated relative to your income bracket and your Average Indexed Monthly Earnings (AIME). If you are still collecting SSDI when you reach retirement age, your disability benefits automatically convert to retirement benefits of the same amount.

All these benefits can be used to offset the costs of long-term care, medical expenses, living expenses, and even saving for retirement.

Disability Insurance Glossary of Terms

The insurance industry is rife with jargon, so it’s important to have a good understanding of the terms you’re most likely to encounter.

We’ve pulled together a few definitions to help you better understand your coverage and benefits.

Basic Terms

When researching disability insurance for nurses, you’re likely to encounter the following basic terms:

  • Any occupation: This term is used to describe an injury or disability that prevents an individual from working in any profession. Any-occupation coverage typically kicks in after you’ve been receiving benefits for 24 months.
  • Definition of disability: All insurance policies will outline the qualifying terms for benefits in their definition of disability. It will help determine if you qualify for partial disability, full disability, or short or long-term disability.
  • Group disability insurance: This type of insurance is provided by your employer. Because it’s purchased for a large group of people and supplemented by the company, the premium is often lower than individual insurance policies.
  • Individual disability insurance: This type of insurance is purchased by an individual through a broker or insurance agent and often covers long-term disabilities, but the premium is often higher than group plans.
  • Own-occupation: This term is used to describe an injury or disability that prevents an individual from performing the duties of their specific profession. Own-occupation coverage is typically applied to the first 24 months of a disability benefit period.
  • Partial disability: You can receive a portion of your disability benefits if you can work in a limited capacity earning less than you were before you became disabled.
  • Social Security disability insurance (SSDI): This type of disability insurance is paid by American tax dollars, but it’s more difficult to qualify and the benefits are typically lower.
  • Total disability: If you are unable to perform the major duties of your job description due to physical or mental deficits, you may collect your entire monthly benefit amount.

Claim and Benefits Terms

When shopping around for a policy that fits your needs, you may run into the following terms:

  • Benefit: This part of your policy outlines the exact amount you can expect to receive monthly while you’re unable to work.
  • Benefit period: This part of your policy will outline the amount of time you’re entitled to benefits. For short-term benefits, this period is typically two years or however long it takes to recover. Long-term benefits often extend to retirement.
  • Claim: Once you have disability insurance, you’ll have to provide proof of disability by filing a claim to access your benefits.
  • Waiting period: Also known as an elimination period; this is the period of time you’ll be required to wait after becoming disabled before you’re entitled to benefits.
  • Exclusion: This term refers to any condition or activity that the policy will not cover.
  • Underwriting: During this process, insurance professionals will calculate the total risk of covering you so they can assign the appropriate monthly rate to your policy. In some cases, this process will result in a rejection of risks and you won’t be eligible for coverage.

Coverage Terms

Once you have a policy, you’ll want to have a solid understanding of your coverage. Knowing the following terms can help:

  • Capital Sum Benefit: This type of benefit is paid out in certain situations, such as surviving 30 days after the complete loss of a hand or foot.
  • Cost-of-living adjustment: This optional add-on allows your benefit amount to increase with inflation. You can often add this benefit to your policy for an extra fee.
  • Monthly premium: This term refers to the amount you’ll have to pay to keep your policy active. It is calculated based on your current health, any add-ons you select, the type of disability coverage, and the benefit amount. You will not be entitled to benefits if you are not current on your insurance premiums.
  • Pre-existing condition: This term refers to any injury, condition, or disability you already had before purchasing the policy. Pre-existing conditions are still covered but may require longer waiting periods before you can file a claim.
  • Presumptive disability: In some cases, an insurance provider may waive the waiting period if you have a sudden disability such as blindness, deafness, or multiple amputations.
  • Survivor benefit: Some insurance policies will pay out to beneficiaries if a policyholder dies while collecting benefits.
  • Transition benefits: Self-employed individuals can often collect transition benefits while they rebuild their business following a disability.
  • Waiver of Premium: In some cases, insurers will waive the monthly premium requirement after an individual has been collecting disability insurance for more than 90 days.

This glossary is far from exhaustive so we recommend discussing any confusing terms with a fiduciary financial advisor, insurance broker, or disability attorney, so you can feel confident in your understanding of financial protection.

Understanding Your Existing Insurance Coverage and Benefits

Full-time employed nurses will often be offered a benefits package when they sign an offer letter. Typically, this package includes your base pay, bonus, paid time off, health insurance, paid family leave, life insurance, and disability insurance.

Employers are not legally required to offer short and long-term disability insurance, but it is common. Depending on your benefits package, you

Some people may be aware of workers’ compensation, which can be an option if you are injured while performing your job functions, but disability insurance covers injuries that occur outside of work.

We recommend talking to your Human Resources (HR) Department to better understand your benefits package if you are currently employed full-time.

What Nurses Should Look for When Shopping for Disability Insurance

If you don’t receive disability insurance coverage through your place of employment, it’s a good idea to shop around for coverage.

When shopping for a policy, you’ll want to consider the following:

  • Compare the definition of coverage across different providers: Some insurance carriers will only pay out benefits if you can’t work in any occupation, whereas others will pay out if you are unable to perform your own occupation.
  • Review the benefit period: Young people should consider plans with lifetime coverage, but it’s recommended that you purchase a policy that at least covers you until retirement age.
  • Calculate other income sources: If you’re likely to have other income sources, such as a pension or investment dividends, you may not need the highest replacement percentage. In general, we recommend a policy that will replace at least 60% of your taxable earnings.
  • Cover both accident and illness: Some disability insurance policies only cover accidents, which may save you significantly on your monthly premiums, but they won’t give you comprehensive income protection. We recommend carrying accident and illness disability insurance.
  • Pay more for cost-of-living adjustments: You’re likely purchasing a policy that won’t pay out until far into the future. Paying extra for a cost-of-living adjustment can ensure that your benefit amount is an appropriate amount for your future living expenses.
  • Policies with partial, residual, or transitional benefits: If you’re not permanently disabled and you ever return to work in some capacity, these benefits can provide supplemental income while you ease back into the workforce.
  • Ongoing coverage: Policies can be non-cancelable or renewable. Non-cancelable policies provide the same level of ongoing coverage with a locked-in rate, whereas renewable policies may increase your premiums over time.
  • Length of the elimination period: Plans with higher premiums may result in shorter elimination periods, which can allow you to access benefits sooner than plans with longer elimination periods. Before choosing a policy, you’ll want to confirm you understand the number of days you’ll have to wait after filing a disability claim before you can receive benefits.

Nurses will often have access to insurance partnerships through state nursing associations. While nursing associations may be able to give you access to attractive group insurance rates, you’ll likely be limited to preset policy terms and subject to rate increases as you age.

Working with a private insurance broker can help you discover better disability coverage with locked-in rates.

Examples of Qualifying Disabilities for Social Security Benefits

The Social Security Administration (SSA) maintains a list of health issues that qualify as disabilities.

Each disability category outlines a stringent rubric every recipient must be evaluated against.

These disabilities are broken up into the following categories for adults:

  • Cancer
  • Cardiovascular systems
  • Congenital issues affecting more than one body system
  • Digestive systems
  • Endocrine disorders
  • Genitourinary disorders
  • Hematological disorders
  • Immune system disorders
  • Mental disorders
  • Musculoskeletal disorders
  • Neurological disorders
  • Respiratory disorders
  • Skin disorders
  • Special senses and speech

Children who have prolonged illnesses lasting 12 months or more may also be eligible for Social Security benefits if their health issues fall into any of the following categories:

  • Cardiovascular disorders
  • Congenital issues affecting more than one body system
  • Digestive system
  • Endocrine disorders
  • Genitourinary disorders
  • Hematological disorders
  • Low birth weight/failure to thrive
  • Musculoskeletal disorders
  • Neurological disorders
  • Respiratory disorders
  • Skin disorders
  • Special senses and speech

How to File a Disability Insurance Claim

There are a few differences in how you file a disability insurance claim depending on your benefits provider.

Applying for SSDI Benefits

You can apply for SSDI as soon as you become disabled, but you’ll have to wait until you’ve been out of work for at least five months to receive payments.

In some cases, SSDI will backpay for up to 12 months after you’ve been approved.

You can apply online or call the toll-free number 1-800-772-1213 to walk through the process with a representative.

Filing a Disability Insurance Claim with a Private Carrier or SSDI

Every insurance company will have its preferred disability claims process, but there are a few standards across the industry. Many of these forms will also be requested during the SSDI application process.

Many insurance providers will request a claims packet, which includes several statements detailing your disability, the severity of your condition, and its impact on your life. The following statements are often requested during the claims process:

  • Personal statement: This form collects biographical information, such as your place of work, address, and sources of income, including other disability benefits, doctors’ names, and health insurance providers.
  • Attending physician’s statement (APS): This form outlines your level of impairment. It must be filled out by the physician treating you for the disability you are applying for. It collects information about your diagnosis, medical history, and treatment plan. It ultimately asks your doctors’ conclusive opinion on whether or not you are able to work.
  • Employer statement: If you’re employed, this form will collect information about your essential job functions, the date you last worked, and other details about how your disability limits your ability to work. It will also request information about employer-provided benefits.
  • Direct deposit form: Submitting a direct deposit form allows you to get paid in a timely fashion. You’ll likely be asked for your bank name, account number, and routed number, but you may also need to provide a voided check.

8 Best Disability Insurance Companies for Nurses

The following insurance carriers demonstrate strong financial stability, positive reputations in the industry, and a variety of coverage options for nurses.

Insurance Company A.M. Best Score BBB Score Disability Insurance Benefits
1. Assurity A- A+ Short-term, long-term, individual, supplemental
2. Guardian A++ A+ Short-term, long-term, individual, supplemental
3. Thrivent A++ A+ Short-term, long-term, individual
4. MetLife A+ NR Short-term, long-term, medical, and family leave
5. Mutual of Omaha A+ A+ Short-term, long-term, individual
6. Northwestern Mutual A++ A- Short-term, long-term, individual, supplemental
7. Unum A- A+ Short-term, long-term, individual, supplemental
8. State Farm A++ A+ Short-term, long-term, individual

Requesting a disability insurance quote can give you a better idea of what to expect as far as the premiums and coverage terms these companies can offer.

Is it Worth it to Get a Personal Disability Insurance Policy?

There are a number of benefits to purchasing individual disability insurance policies, even if you have an employer-provided benefit.

  • Flexibility: Owning your disability insurance policy gives you the flexibility to change jobs as you please, which can allow you to substantially increase your salary through outside promotions, travel nursing contracts, and other advantageous opportunities. In decades past, nurses stayed with hospitals for their entire careers, but that isn’t the norm anymore.
  • No More Re-Enrollment: If you’re counting on employer-provided disability insurance, you’ll have to re-enroll in a policy every time you change jobs. This process can get costly because premiums often increase for new and aging members.
  • Broader Definition of Disability: Individual disability insurance is also more likely to have a broader definition of disability because the risk for the policy is calculated differently. Broader definitions of disability allow more flexibility for the types of disabilities, including mental health issues, that can ultimately be covered.
  • Funded with Post-Tax Income: Because employer-provided plans are often paid by your pre-tax income, you’ll have to pay taxes on these benefits when you collect. Individual insurance policies are funded with your post-tax income, so you won’t have to pay taxes on your benefits.

Frequently Asked Questions

Is disability insurance for nurses the same as health insurance?

Disability insurance is not the same as health insurance. Disability insurance is designed to provide income protection when an individual is unable to work due to a disability. It does not provide health insurance benefits. Medical coverage is a separate insurance product.

Is disability insurance for nurses the same as life insurance?

Disability insurance for nurses is not the same as life insurance. Life insurance pays out to your beneficiaries if you die whereas disability insurance pays out to you while you’re unable to work. Both disability insurance and life insurance are forms of income protection. We recommend carrying both policies for the most protection.

What is the average salary of a nurse in the U.S.?

The average salary of a nurse in the U.S. varies based on specialty and professional designation. For example, a nurse practitioner or nurse anesthetist may make more than a registered nurse.

Do nurses get Social Security benefits?

Nurses can get Social Security benefits if they are unable to work, but the exact disability benefits will depend on the injury and other criteria set by the SSA.

In general, the SSA will use the Blue Book to determine if your disability is listed as an impairment that automatically qualifies for benefits, regardless of your ability to transfer skills to another profession.

If your disability does not automatically qualify you, the SSA will use additional criteria, such as Medical-Vocational Guidelines or Residual Functional Capacity (RFC).

In addition to having a qualifying disability, nurses must meet income and asset limits.

The approval process for Social Security benefits is long and complex, so we recommend that all individuals contact a local lawyer or disability advocate for representation and tips to maximize their benefits package.