Short-Term vs. Long-Term Disability Insurance: What’s the Difference?

What would happen if an injury prevented you from working for several weeks – or even months? During that period, income has stopped, medical bills are piling up and your mortgage still needs to be paid. Do you wait it out and take the financial hit? Disability insurance is a preparatory measure that helps you maintain your current lifestyle and stay financially afloat until you recover and return to work.
In general, short- and long-term disability insurance policies assist by replacing lost wages. This can be especially helpful if you do not have a workers’ compensation claim and you have used up all of your paid time off. Plans may be offered through an employer – in this case, short-term is more common – or you can purchase an individual policy.
However, many people might be hesitant to pursue this type of coverage, claiming they’ll stay safe on the job and at home. Yet, think about this: The typical worker has a 30-percent chance of becoming disabled, 12 percent of the population receives disability benefits and one in eight workers becomes temporarily disabled at least once during their working years. Even though disability insurance might seem unnecessary now, you never know if you may need it.
Which policy is right for you? Consider the differences between short- and long-term disability insurance.
Short-Term Disability: These plans are designed for limited, shorter periods – no greater than 52 weeks (one year). When you need to use them, short-term disability benefits kick in after about 14 days and can be used until you:

  • Exceed the maximum coverage amount
  • Reach the coverage period
  • Recover and return to work

Because of its lifespan, premiums tend to be less expensive. When might you seek short-term disability?

  • If treatment for an illness exceeds your job benefits.
  • The impending birth of a child
  • An injury – on-the-job or otherwise – from which you’ll recover

In terms of getting coverage, employers offering disability insurance usually give workers this option. However, if you’re self-employed, you can also purchase this policy from your personal agent.
Long-Term Disability: While these plans work in a similar way to short-term disability, be mindful of the differences. For one, terms are significantly longer – up to several years, until you reach age 65 or even through the end of your life. As a result, this form of disability insurance provides better assistance when you’re living with a long-term illness that prevents you from working, such as:

  • Cancer
  • Permanent injury
  • Musculoskeletal and connective tissue disorders
  • Cardiovascular and circulatory disorders

Long-term disability is not an option if you or a loved one is recovering from childbirth. To receive your benefits, claims typically take 90 days – if not longer – to process.
It’s recommended that you take out both policies due to the benefits: Short-term in the event of childbirth or a temporary injury and long-term anticipating any major health scares down the road. Should you have to use both policies – for instance, an injury that takes longer than expected to heal or a condition that worsens – you begin with short-term, then your long-term disability policy kicks in.
Think you might need short- or long-term disability insurance? Rather than take out a policy when it’s too late, be proactive and speak with an Ion Insurance agent about what coverage makes the most sense for you. To get started, give us a call at 203.439.2815.