What is disability insurance? It is an insurance policy that covers some of an individual’s lost income while they are unable to work due to an illness or injury. However, one must note that there are two different kinds of insurance – some policies that cover workers for a short period of time like a matter of months, and others that cover workers for longer periods of time, like decades. What many people face is the question: Should I choose short term or long term disability insurance?
Short Term Disability Insurance
If a worker cannot work for a brief period of time, then they may consider getting short term disability insurance. Short term policies can last as long as two years in some situations, but the typical policy will last between three and six months. Short term also carries the benefit of being a more affordable option since the policy benefits are paid for a shorter amount of time. Another benefit is the fact that, with short term policies, benefits will most often start almost immediately or within two weeks upon the policy holder becoming disabled. If you have long term disability coverage through an employer, then this may be a good option for you because you already have a back-up plan.
As far as disadvantages, there are some. Benefits will run out within a couple of months, which will leave disabled individuals on their own as far as how they are going to continue receiving payments. They also usually have fewer options for payouts under certain circumstances, such as the death of a policy holder when they become disabled close to retirement age.
Long Term Disability Insurance
Long term disability may be the best option for those who need monthly payments lasting longer than six months, all the way up to, in some cases, the policy holder reaches the age 75 or older. The biggest advantage of this type of insurance is the peace of mind that comes with knowing that benefits of up to 70% of your salary will be covered as long as the disability lasts. They also allow for more options, including coverage for things like hospital stays and adding supplemental insurance that could increase your monthly payments.
However, there are also disadvantages to long term disability insurance. Long term policies will usually cost more than short term insurance. They also usually have a waiting period of between three and six months before the benefits start rolling in to the policy holder. This could leave individuals to pay for their own expenses for the first few months within receiving the disability.
Now that I’ve made a decision, how do I buy one or the other?
You are able to buy either short term or long term disability insurance through a private company that sells individual policies. However, you can also purchase group disability insurance through associations to which you belong or through your employer as well. Employers, in some cases, may offer you a certain amount of disability insurance at no cost to you as part of a benefits package. It is always beneficial to check.
If you have become disabled under any circumstances, you may want a lawyer on your side. They can be helpful when it comes to reviewing your case and talking to you about the complex surrounding laws. Call MDL today to schedule a free consultation and speak to an experienced attorney who will be on your side.