Disability insurance helps protect your income if you can't work and get your regular paycheck.
You may have Group Short Term Disability insurance or Group Long Term Disability insurance. What's the difference?
- Short term disability insurance can help pay the bills if you become disabled and can't work for a short amount of time.
- Long term disability insurance can help pay the bills if you become disabled and can't work for a longer amount of time.
Replaces a portion of your pay when you miss work because of a covered disability
Partial benefit payments can continue after you return to work
If your disability returns within a period of time, benefits can resume with no waiting period
Understanding the differences between short- and long-term disability can be tough and knowing which coverage is right for you is not always easy. However, disability insurance is an essential part of a solid financial plan, so it’s important to understand your options.
What is disability insurance?
Disability insurance is designed to help protect you and your family financially if you become unable to work due to a covered injury or illness. When you use disability insurance, you receive a percentage of your monthly income. This could help you focus on your recovery and worry less about bills or other expenses that may be difficult to pay without financial support.
Understand the importance of disability insurance
What is the difference between short- and long-term disability?
The main difference between short- and long-term disability insurance is the amount of time until the benefits begin and how long the coverage lasts. Both insurance plans are designed to provide income protection until you return to work. Let’s look at how each plan can benefit you, depending on your situation!
Short-Term Disability Insurance
Short-term disability insurance is designed to help protect your paycheck for a shorter period. Depending on your covered injury or illness, this plan may cover you up to a few weeks or a few months, usually no longer than one year. The coverage may not be long-term, but the elimination period (also known as the “waiting period”) is usually only 7 to 14 days. For example, suppose your elimination period is 14 days. In that case there will only be 14 days in between the injury/illness and when you would be eligible to receive benefits after filing your claim.
Good forms 101: The disability claim forms
Here are some common causes of short-term disability insurance:
- Injury from a major accident
- C-section
- Upcoming surgery and recovery time
- Experiencing bad side effects from medicine or medical procedures
Long-Term Disability Insurance
Like it sounds, long-term disability insurance can help protect your paycheck for an extended period. If you are looking at a longer recovery or a more serious condition, this is where long-term disability insurance is useful. Depending on your specific plan or when you’re able to return to work, you may receive benefits for up to two years, five years, ten years, or even until you retire.
The elimination period or “waiting period” for long-term disability is usually 90 days. You might have to wait a more extended period to receive your benefits, but you are also covered for longer.
Here are some common causes of long-term disability insurance:
- Heart disease, cancer, diabetes, or stroke
- Mental illnesses
- Muscle, back, or other joint pains
- Arthritis
What To Consider
How long can you go without a paycheck? How many sick days does your employer provide? These are two fundamental questions to ask yourself when deciding between short- vs. long-term disability insurance. Suppose you cannot go over a month without a paycheck and only have ten sick days. In that case, you should consider enrolling in both insurance plans, so you are prepared for the unexpected and have options to help you have financial protection. On the other hand, if you can go months or even a year without a paycheck, then long-term disability insurance may be enough for you. Talk to your American Fidelity account manager to discuss the best options for you!
3 questions you should ask about disability income insurance during your benefits enrollment
This blog is up to date as of April 2022 and has not been updated for changes in the law, administration or current events.
- Tags:
- Disability
How does long-term disability insurance work?
- It pays monthly income directly to you when you're unable to work because of a covered total disability.
- You choose the length of time you must be disabled before you start receiving benefits (Elimination Period) and the length of time you would receive benefits.
- Options include a five-year benefit period or a "to age 67" benefit option.
- Maximum monthly benefit amounts range from $500 to $20,000, based on your income and occupation.
- You can customize your coverage with different riders.
Did you know?
- Just over 1 in 4 of today's 20-year-olds will become disabled before they retire.*
- Insurance statistics show that only 9 percent of long-term disabilities actually resulted from serious accidents.**
- According to a Bureau of Labor Statistics 2014 Study, just 33 percent of the U.S. workforce had long-term disability coverage.
By owning a long-term disability insurance policy, the monthly benefit can help:
- Pay your bills
- Pay your rent or mortgage loan payments
- Buy groceries
- Make car payments
Do you have the resources today?
Using savings
Savings accounts can serve as a temporary safety net, but most people haven't saved enough. A disability policy can provide a longer-term solution. According to the 2014 Consumer Disability Awareness Study, 57 percent surveyed said they had enough savings to pay their bills for 6 months or less.
Collecting social security
Because the definition of disability is very strict (the disability must be expected to last 12 months or more, or result in death), 65 percent of all claims submitted are denied. In 2016, the average Social Security benefit amount was $1,166 per month.***
For additional information on long-term disability insurance or short-term disability insurance, schedule some time with a State Farm® agent to talk about your disability insurance needs.
Disclosures
*Social Security Fact Sheet, June 2016
**LIMRA 2015 Disability Awareness
Month
*** Social Security Publication No. 05-10570, June 2016
Disability insurance products are not available in MA, NJ, and RI.
The information provides a brief, general description of the coverage provided by these policies. It is not a contract and certain exclusions and limitations apply. A complete statement of the coverage provided is found only in the policy itself. Policy coverages, exclusions, and limitations may vary in some states.
For exact terms and conditions see: Disability Income policies ICC16 97064IC, ICC16 97065IC and ICC16 97066IC.