Short- vs Long-Term Disability Insurance

Although many people have some form of short-term disability protection, long-term disability insurance is much less common. Here are a few things to consider about both short- and long-term disability insurance.

Short-Term Disability Insurance

This type of protection is designed to provide you with an income if you are unable to work for a relatively short period. Usually, if an injury were to occur, you would first have to use up any sick leave that you have at your work. From that point, this type of insurance would kick in and last for a certain amount of time depending on your policy. A typical length of coverage for short-term disability insurance is 6 months. However, coverage can last as long as a year in some cases.

With this type of coverage, you will not typically receive the full amount of money that you are used to as income. Most of the time, you will receive only about 60 percent of what you made at your job. However, you will not have to pay taxes on this amount, so it is usually close to your take-home pay.

Most people who work for an employer are covered by some type of short-term disability insurance. If an injury occurs at work, you will probably be covered by worker's compensation. This will pay a portion of your income over the short term. Many employers also offer another type of disability insurance that will pay for your wages even if you are not injured at work.

Most people also have automobile insurance that will provide some type of disability coverage for injuries sustained in auto accidents. Therefore, many people have a few different options for coverage on a short-term basis.

Long-Term Disability Insurance

Once your short-term disability benefits runs out, you may need long-term disability insurance coverage to kick in. To benefit from this product, you will have to purchase a policy on your own in most cases. This type of insurance is offered by many different insurance companies, and a variety of policies are available.

Most of these policies are designed to cover you from 1 to 10 years. However, some long-term policies will cover you for your entire working life. If you want to ensure that, if you lose your ability to work, you and your family will be taken care of up until you reach the age of retirement, you could purchase this type of coverage.

Individual Considerations

While the safest thing that you can do is to purchase a long-term disability insurance policy, not everyone has extra money to do so. If this is the case for you, you should still strive to make sure that you are covered in case of an accident. It is also a good idea to save up at least three months' worth of salary in an emergency fund to help you with bills in the event of an accident, injury or other emergency that would keep you from working.

Do you have to be injured at work to get long-term disability?

Most employers do not provide long-term disability coverage. Instead, they offer only short-term disability coverage. After that, the Social Security Administration will be in charge of providing you with disability payments over the long term. You do not need to be injured while working in order to qualify for those payments. The other source of long-term disability coverage would be a separate insurance policy that you purchase. If you have that type of coverage, you do not have to be injured at work.