When you're shopping for a disability insurance policy, one of the questions you'll need to ask yourself is what kind of long-term vs. short-term benefits you want from that policy. Many of the people I talk to aren't aware there's a difference. That difference could be crucial in terms of the benefits offered if you do become disabled.
Long-Term vs. Short-Term Disability Policies
Long-term and short-term disability policies are meant to cover different types of disabilities. Short-term disability income insurance is designed to cover illnesses and accidents that keep you from working for a limited period of time, while long-term benefits cover more serious illnesses and accidents that keep you from working for anywhere from six months to years or even decades. Your disability policy will have a stated waiting period after you become disabled; once this time is up, you can start receiving benefits. Some short-term policies even offer two waiting periods - a shorter one for accidents and a longer one for sicknesses. Waiting periods for short-term policies usually range from 0 to 14 days. Waiting periods for long-term policies range from 30 to 720 days, although a 90-day waiting period is most common.
If you suffer a disability, you'll receive benefits until you recover or reach a certain maximum. By definition, short-term disability policies may pay benefits for up to two years, although many policies pay benefits for only three months, six months, or one year. But long-term disability policies pay benefits for a far longer period - for a few years, up to age 65, or even for a lifetime.
Which Type Is Right for You?
If you can't afford to purchase both, it usually makes more financial sense to choose long-term disability coverage. Most disabilities last only a short time, and you're more likely to be able to financially survive a short-term disability without insurance. However, a long-term disability can seriously threaten your finances if you don't have insurance.
It's a good idea to consider these factors as well:
- Coverage you already have: If you suffer a disability, you may be eligible for benefits from a government-sponsored disability insurance program such as Social Security or workers' compensation (if your disability is work-related). Your employer may also provide coverage, although employers offer short-term coverage more frequently than long-term coverage. Don't buy a policy that duplicates coverage you already have elsewhere.
- What you can afford: Short-term coverage is typically less expensive than long-term coverage because benefits are paid for a shorter period of time.
I can help you protect your paycheck with an affordable disability income insurance policy that meets your needs.