While some may think that disability insurance will never be a topic of conversation in their life, it is good to know the details and differences between what long-term and short-term disability means for you, in case you do need it. A common misconception in the workplace is that worker’s compensation covers time away from work due to any injury or illness. However, worker’s compensation only covers time away from work when the injury/illness was directly related to one’s job. When you sustain an injury or illness and cannot return to work for some time, you should look into disability insurance, which is designed to replace a portion of your average income to support yourself and your needs during recovery. These two options are not government-funded and are connected to private insurers or one’s employer. There are two types of disability insurance offered: short-term and long-term.
Long-Term Disability Insurance
Long-term disability pays benefits to the insured usually equivalent to 40-70% of your income. The time frame for long-term is most probably stated in years: 5, 10, 20, sometimes even until retirement. It also has a longer elimination period and can take several months from sustaining the injury/illness to begin. These time periods will be worked out with your specific plan. This option should be chosen and utilized when you have sustained a long-term injury/illness that prevents you from completing normal day-to-day tasks. In the case of long-term disability, the longer the benefit period, the higher your premium (amount paid to the insurer) will be. The most common reasons for claiming long-term disability are: musculoskeletal disorders, cancer, injuries (fractures, sprains, & strains of muscles/ligaments), severe mental health problems, and circulatory problems (heart attack, stroke). Typically employees must provide medical records that prove the injury/illness has lasted past the elimination period of their plan.
Short-Term Disability Insurance
Short-term disability ensures a higher percentage of your income in contrast to long-term, mostly up to 70%. Because of this, the time frame for short-term disability is usually stated in weeks, months, and up to 2 years. It also comes with a shorter elimination period of around 0 to 14 days after sustaining your injury/illness. This coverage is designed to aid you in recovering from a temporary injury/illness that prevents you from performing your job duties and is typically less expensive than long-term disability plans. The most common reasons for claiming short-term disability are: pregnancy, musculoskeletal disorders, injuries (fractures, sprains, & strains of muscles/ligaments), surgery and recovery time, digestive disorders, and mental health problems (anxiety, depression, etc.). Typically, employees must provide data, such as evidence from a therapist or doctor, stating that they are unable to work for the time being due to their injury/illness.
How to Choose What Is Best For You
Choosing whether long-term or short-term disability is best for your injury/illness is extremely important. A discussion should be had where you set details for your situation and your needs: how long you can go without a paycheck, how many sick days your employer provides you with, etc. You also should prioritize and calculate your monthly expenses, taking into consideration medical bills, rent, loans, and other financial aspects of your life. Consider how much you have saved away. If you already have an emergency fund, short-term disability insurance may not be a necessity. If you do not have an emergency fund, short-term disability insurance should be viewed as an essential financial protection. Furthermore, if your injury/illness is more severe than expected, it may be smarter to take advantage of the benefits that come with claiming long-term disability.
While the idea of having to weigh your options may seem daunting, it does not have to be. At Danskin Agency, we have a team of well-trained professionals who can sit down with you and your loved ones and figure out whether long-term or short-term disability is the best choice for your situation. We will work closely with you to help you sort through your needs and find the best coverage that works for you. If you have any questions about this topic, visit our website or give us a call at 732-449-3800 to learn more.