Do I Need Short-Term or Long-Term Disability Insurance?

Disability insurance is designed to protect individuals while they are unable to work due to an illness or disability. Not all disability insurance policies are created equal, however, and certain plans are created to serve different purposes. It is important to understand the distinct differences between the two main types of disability insurance policies so that you can get the plan you need most. 


This insurance can cover illnesses and injuries such as stroke, cancer, cardiovascular disease, mood disorders such as depression, anxiety and bipolar, and more. If any mental or physical health illnesses run in your family, you will want to consider a disability insurance policy. 


What is Long-Term Disability Insurance? 


Long-term disability insurance is a common policy purchased by individuals or occasionally offered through state programs. This insurance may cover someone for three months to over a year while they are unable to work. In fact, some long-term disability insurance policies may cover an individual up until they are ready to retire.  


The waiting period for long-term disability insurance may be 30, 60, 90 days or even more. 


What is Short-Term Disability Insurance? 


Short-term disability may be less common than long-term disability insurance policies, but they are still useful for individuals who are injured or fall ill and are unable to work. Most short-term disability policies generally last a few weeks or a few months. 


Most of these plans are available through private insurers and are paid through monthly premiums. 


Deciding which plan you need should take careful consideration and be discussed with your family and insurance provider.  


What Happens When Your Short-Term Disability Insurance Runs Out? 


Say you purchased a short-term disability policy, but your condition keeps you out of work for longer than expected. If the time coverage for your short-term disability insurance runs out, you can usually transition into long-term disability insurance. As discussed above, long-term disability can cover you for longer amounts of time than short-term disability insurance. 


Comparing Costs of Short-Term and Long-Term Disability Insurance  


Many people don’t realize that the cost for short-term disability and long-term disability insurance is almost the same in most cases. You generally pay 1% to 3% of your annual salary for either policy. Since long-term disability insurance covers a longer period of time for around the same price, long-term disability insurance is often more utilized. Speak with an insurance agent and compare quotes between insurers to make sure you are getting the best deal on your disability insurance policy. 


Factors aside from your annual salary can affect your disability insurance premiums, as well, including your: 

• Age 
•  Gender 
•  Health history 
•  Physical condition 
•  Occupational duties 

Those who work in industries that require a lot of physical activity, for example, may pay higher rates for disability insurance than someone who works in an office. This is because premiums are partially based on your likelihood of filing a claim. The more likely you are to file a claim, the more you may pay for insurance.  


Age is also a large factor. In fact, many insurers won’t provide disability insurance for individuals older than 59 or 60, as this is close to typical retirement age. If you have a history of health conditions either personally or in your family, you could also see higher disability insurance premiums. Higher coverage limits, especially on long-term disability insurance, can also cause your disability insurance premiums to rise. 


Make sure you have a comprehensive health history for yourself and your family so that you can properly evaluate your risk of illness or injury before purchasing a disability insurance policy. No matter the cost, you want a policy that covers you in case of an accident. 


Why is Disability Insurance Important? 


Whether you choose long-term disability or short-term disability insurance, this type of policy is critical for individuals across industries and lifestyles. It helps guarantee that you won’t be left without money if you lose your job due to a sudden injury or illness. Life can be unexpected, but that doesn’t mean you have to be unprepared. Disability insurance allows you to prepare for the worst and recover in case it happens. Be sure to speak with an insurance agent about your disability insurance needs and what type of policy is best for you. If you plan to retire sooner rather than later, you may only want a short-term disability insurance policy. Most insurers have restrictions on when you can purchase disability insurance, however, so be sure not to wait too long to purchase a policy and get covered.