When you filled out your insurance enrollment last year, it’s possible that your company gave you the option to contribute to short-term and long-term disability insurance (or maybe you’re lucky enough that your company covers the cost for you). If you work a desk job, you probably think that the chance of you needing either policy is fairly slim, but according to the Council for Disability Awareness, about one in four 20-year-olds have a chance of being disabled during their working years. Take a look at the two types of policies and be sure to speak to an expert to decide if you need additional insurance for what may lie ahead.
Short-term disability insurance
Short-term disability insurance, as the name implies, is there for you and your family if you were to suffer an illness or injury that would prevent you from working for a period of time. When you can’t work, the insurance policy continues to pay you part of your salary to help make ends meet while you recover. The Balance clarifies that this insurance is not for injuries or illnesses that occur in the workplace, but rather for things that happen to you outside of that space, such as car accidents. If you’re a woman and your office doesn’t have a maternity leave policy, it’s possible that your short-term disability insurance covers time off for childbirth and any complications.
Coverage from a short-term disability insurance policy often kicks in once you have exhausted all of your sick days. Insure.com and the America's Health Insurance Plans trade group report that policies cover about 60 to 70 percent of your income, with many having a payment cap that affects how much money you can receive when you’re out of the office. How long the coverage lasts varies widely from about three to six months, depending on your employer and policy.
Long-term disability insurance
After the length of your short-term disability insurance is exhausted, a long-term disability insurance policy steps in to help keep paying your bills. Insure.com reports that these longer policies typically pay you a lower percentage of your original salary (50-60 percent), but they last until you can get back to work or its term runs out. Some policies will only cover your illness or injury for a finite amount of years, but some policies will pay you until the age of 65, or the average end of your working years. Also, if you are able to return to the workforce but your new job pays less than the job you had when you became disabled, some policies have a clause that ensures the policy will continue paying you benefits to cover your lost income.
If your household is not able to pay for living expenses for the months or years required to recover from a severe injury or debilitating illness, short-term and long-term insurance policies are a great helping hand. Insure.com reports that about 70 percent of Americans do not have disability insurance, so you should check and see if you are covered by a policy before you have need of its assistance.