We don’t often think a freak accident or sudden illness will happen to us personally. We see it happen to others but don’t think it is something we have to worry about ourselves. No matter how healthy you may be or how safe your work conditions are, statistically there is always the chance you could fall injured or ill. It is actually more common than you may think with about 15% of the world’s population living with a disability.
That’s why it is essential to prepare for the unexpected. Most employers offer low-level coverage, while freelancers are left without any benefits, needing to find coverage on their own. But where do you start?
Disability insurance is a way to protect your future self financially and provide security in the event of illness or injury. Having disability coverage means that in these difficult circumstances where you would be out of work, it would pay your benefits to cover your expenses ranging from house payments, car payments, debt, and more. While policies do vary, disability insurance can typically protect up to 70% of your income for anywhere from 3 months to the time you reach retirement age.
When looking into disability insurance, you may find yourself seeing two different options – short term and long term. We’ll explore the differences below and why both are important and effective in their own way.
Put simply, the two main differences between long term and short term disability coverage are the length of the benefit periods and the level of coverage each type of policy offers.
Short term
Short term disability insurance is designed to cover you and offer benefits for a short period of time following an illness or injury. If you were to find yourself ill or injured and you could not go to work while you recover, then short term disability would help you to receive a part of your typical pay so that you can continue to afford your bills.
While policies can vary and are dependent on your personal situation, short term disability insurance typically covers you for anywhere between 3-6 months. Short term disability insurance also can ensure a greater percentage of your income versus long term. For short term, this coverage can go up to 70%.
Long term
Long term disability is designed to provide these benefits for a longer period. If you were to be seriously injured, become sick, or have a medical condition that would take you away from work, you would lose the ability to generate an income. That’s where long term insurance comes in. It can provide for years rather than months with periods for long term disability insurance going anywhere from 5 to 20 years or even until you reach retirement age, dependent on your plan.
While short term coverage nears 70%, long term disability typically pays benefits equivalent to 40-70% of your income, but this is for over a longer period of time.
When looking at both, you can expect to pay 1% to 3% of your annual salary for a disability policy. But the perk of long term disability insurance is that is lasts much longer than short term insurance, making it more cost-effective overall due to its longer payout period.
What about both?
Does it make sense to have both short term and long term coverage? The answer is yes. It is useful to have both policies in place because you never know what medical issue may arise. Otherwise it is a gamble not knowing if you could face something that only takes you away from work for a few months or a more serious, long term situation. It will grant you peace of mind and the financial security to move forward.
If you have both short term and long term disability policies in place, then you will receive the short term disability benefits first throughout the waiting period. Once this time passes, your long term disability coverage begins, moving into your next policy’s benefits.
It’s always better to be protected and have a plan in place. Explore your short term and long term disability insurance options with Heroes Sick Pay to ensure financial security. We’ll help you find the perfect plan fits your lifestyle and needs.
