Disability insurance is one of those things that you think you may never need but don’t realize just how common it is. Over a quarter of today’s 20-year-olds should expect to be out of work for at least an entire year before they reach retirement age as a result of a disabling condition. This includes some of the most common causes like mental health issues, cancer, or pregnancy; all of which you may not think about when you think of disability insurance. It’s critical to protect yourself in the case of injury or illness that puts you out of work, but it’s also important that you understand how long and short term disability insurance actually differs.
How Does Disability Insurance Work?
Also sometimes referred to as “disability income insurance,” disability insurance is meant to replace a portion of your income in the event that you are unable to work due to serious illness or injury. These insurance benefits are paid directly to you which allows you to spend the money however you want. While these kinds of policies can vary, they typically cover up to 70% of your income, usually from 3 months to indefinitely until you retire. Every policy looks a little different, but the two differences between long and short term disability are the lengths and level of coverage they offer.
How Do Long and Short Term Disability Differ?
As one might guess, the major difference between the two is the period of time that you will receive benefits if unable to work, or the benefit period. Short term disability insurance is meant to be a quick, temporary fix that will generally cover you for between 3-6 months. Conversely, long term disability offers insurance for longer stretches of time, typically in chunks of years like 5, 10, 20, or even up until you hit retirement age.
How Do Their Coverage Levels Differ?
Both of these options allow for some amount of flexibility when it comes to your coverage. However, short term disability usually offers a higher percent of your income, all the way up to 70%. Long term disability is generally somewhere between 40-70% of your income. Take a look at your monthly expenses and remember that you may have additional medical bills. This can help you determine what kind of coverage is ideal for you.
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Malden Solutions has a wealth of expertise in providing employer insurance solutions, HR solutions, and individual insurance solutions to businesses both big and small. Our team of seasoned professionals can help you navigate the rapidly-changing world of insurance with ease. We partner with businesses and individuals throughout the country to provide our dedicated services for employee benefits but also work within our surrounding communities in Maryland, Northern Virginia, and Washington, D.C. Contact us today to learn more about how we can provide effective, dynamic solutions for your business. Stay connected with us on Twitter, Facebook, and Linkedin.