What Long-Term Disability Insurance Actually Covers
Long-term disability insurance in Colorado is individual coverage you purchase on your own, separate from any employer plan. As an independent brokerage, we compare policies across multiple carriers to find the right fit for your income, occupation, and budget.
A few key terms worth understanding before you shop:
- Elimination period: The waiting period before benefits begin, typically 60 to 180 days. Think of it as the deductible measured in time. The longer you can wait, the lower your premium.
- Benefit period: How long benefits are paid if you remain disabled. Options typically range from two years to age 65. A longer benefit period costs more but provides substantially more protection.
- Own-occupation definition: The strongest form of disability coverage. It pays benefits if you can't perform the specific duties of your occupation — even if you could theoretically do other work. This matters most for professionals and tradespeople whose income is tied to a specific skill set.
Not all policies define disability the same way. We walk you through the differences so you're not discovering the fine print when you need to file a claim.
For most people, income doesn't stop because they choose to stop working. It stops because something forces them to. An injury, a serious illness, a surgery with a longer recovery than expected. If you're self-employed or own a small business, there's no HR department cutting you a paycheck while you heal. There's just the gap.
Long-term disability insurance exists to fill that gap. It replaces a portion of your income — typically 60 to 70 percent — if an illness or injury keeps you from working for an extended period. That income keeps your rent paid, your business afloat, and your family stable while you focus on recovery instead of finances.
What Happens to Your Income If You Can't Work?
Colorado FAMLI, SSDI, and Private Disability — What Each One Actually Does
Many Coloradans assume state programs will cover them if they become disabled. Here's what those programs actually provide — and where they stop.
Colorado FAMLI is a paid family and medical leave program funded through payroll contributions. If you're a W-2 employee, you're enrolled automatically. If you're self-employed, participation is optional, and you must actively opt in. FAMLI provides up to 12 weeks of partial wage replacement for qualifying conditions. That's meaningful coverage for a short leave — but it ends there.
Social Security Disability Insurance (SSDI) is available if you've paid into the system long enough, but it comes with a five-month waiting period before any benefits are paid, and approval rates for initial claims are low. The average monthly SSDI benefit is around $1,500, which falls short of what most working adults need to maintain their household.
Private long-term disability insurance is where the real income protection lives. It activates after your elimination period, pays for years rather than weeks, and is sized to your actual income — not a flat government formula. For self-employed individuals and small business owners, it's often the only meaningful income protection available.
Disability Coverage Built for the Self-Employed and Small Business Owners
If you work for yourself, no one is offering you group disability coverage at open enrollment. That's not a gap most people think about until they're sitting across from a doctor with bad news.
We work with self-employed individuals and small business owners across Colorado to find individual long-term disability policies that match their income structure, their industry, and their risk tolerance. Whether you're a freelancer, a contractor, a sole proprietor, or a business owner with a small team, there are private disability options available to you — and we compare them across carriers so you're not stuck with whatever one company happens to offer.
A few things that affect your individual policy:
- Your occupation and how it's classified by the carrier
- Whether you want own-occupation or any-occupation coverage
- Your current income and how much you want to replace
- Your elimination period preference and how long you could sustain expenses before benefits kick in
- Your age and health history at the time of application
Does it cost more to use a health insurance broker?
Generally, you don't pay us a separate fee to help you compare and enroll in the plans we represent. Insurance carriers may compensate brokers when an enrollment occurs.
We'll explain our role, review the options available to you, and help you understand what you're considering before you make a decision.
How do insurance brokers get paid?
Insurance brokers are commonly compensated by insurance carriers when clients enroll in certain plans. That allows us to help clients review coverage without charging a separate consultation fee in many situations.
If anything about our compensation applies differently to your situation, we'll explain it before you enroll.
What's the difference between an insurance broker and an agent?
Some insurance agents represent a single insurance company. Independent brokers can work with multiple carriers.
As an independent brokerage, Lighthouse Group can review plans from the insurance companies we represent and help you compare factors such as premiums, benefits, provider networks, and prescription coverage.
Can a broker help me after I enroll?
Yes. Our relationship doesn't have to end when you choose a plan.
We can continue helping with questions about your coverage, renewals, plan changes, and other issues that come up along the way. If something isn't making sense, you have someone you can ask.
Why not just buy a plan on my own?
You absolutely can.
The challenge is that a plan name and monthly premium don't tell you everything. Your doctors, prescriptions, provider network, deductible, and expected healthcare needs can all affect how well a plan works for you.
We help you look beyond the price tag so you can better understand what you're choosing before you enroll.
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Your Questions About Long-Term Disability Insurance, Answered
How is long-term disability different from short-term disability?
Short-term disability typically covers a few weeks to a few months of missed work. Long-term disability picks up where short-term coverage leaves off and can pay benefits for years — or in some cases until retirement age. If you have both, the short-term policy covers the elimination period of the long-term policy.Short-term disability typically covers a few weeks to a few months of missed work. Long-term disability picks up where short-term coverage leaves off and can pay benefits for years — or in some cases until retirement age. If you have both, the short-term policy covers the elimination period of the long-term policy.Do I need long-term disability insurance if I'm self-employed in Colorado?
If your income depends on your ability to work, then yes — this coverage is especially important for self-employed individuals. You don't have an employer plan to fall back on, and Colorado's FAMLI program only covers you if you've opted in, and only for up to 12 weeks. A long-term disability policy provides the income protection that no state program or employer benefit is going to provide for you.If your income depends on your ability to work, then yes — this coverage is especially important for self-employed individuals. You don't have an employer plan to fall back on, and Colorado's FAMLI program only covers you if you've opted in, and only for up to 12 weeks. A long-term disability policy provides the income protection that no state program or employer benefit is going to provide for you.How does Colorado FAMLI compare to private long-term disability insurance?
FAMLI covers up to 12 weeks of partial wage replacement for qualifying medical and family events. Private long-term disability insurance covers extended periods of disability — often two, five, or ten years, or through age 65 — and is sized to your actual income rather than a state formula. They serve different purposes, and for most self-employed workers, FAMLI alone isn't enough.FAMLI covers up to 12 weeks of partial wage replacement for qualifying medical and family events. Private long-term disability insurance covers extended periods of disability — often two, five, or ten years, or through age 65 — and is sized to your actual income rather than a state formula. They serve different purposes, and for most self-employed workers, FAMLI alone isn't enough.What is own-occupation disability coverage and do I need it?
Own-occupation coverage pays benefits if you can no longer perform the specific duties of your occupation, even if you could do other work. It's the strongest definition of disability available and matters most for professionals and skilled tradespeople whose income is tied to a particular role or skill set. Whether you need it depends on your occupation, your income, and what you could realistically do if you couldn't perform your current work.Own-occupation coverage pays benefits if you can no longer perform the specific duties of your occupation, even if you could do other work. It's the strongest definition of disability available and matters most for professionals and skilled tradespeople whose income is tied to a particular role or skill set. Whether you need it depends on your occupation, your income, and what you could realistically do if you couldn't perform your current work.How much does long-term disability insurance cost in Colorado?
Premiums vary based on your age, health, occupation, income, elimination period, benefit period, and the policy's definition of disability. Generally, expect long-term disability premiums to run between one and three percent of your annual income. We compare options across carriers to find coverage that fits your budget without sacrificing the terms that matter most.Premiums vary based on your age, health, occupation, income, elimination period, benefit period, and the policy's definition of disability. Generally, expect long-term disability premiums to run between one and three percent of your annual income. We compare options across carriers to find coverage that fits your budget without sacrificing the terms that matter most.
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Talk Through Your Income Protection Options With Us
We've been helping Coloradans understand their insurance options since 2015, and we don't push products — we ask questions, compare what's available across carriers, and help you decide what actually makes sense for your situation. If you're self-employed, own a business, or just want to understand whether you have a real gap in your income protection, we're glad to take a look with you.
Reach out to request an income protection review. We'll walk through your current coverage, identify any gaps, and compare individual long-term disability options that fit your income and your life.
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