What’s the difference between short term and long term disability? This is a common question that many people ask when considering their insurance options. Both short term and long term disability insurance provide financial support to individuals who are unable to work due to injury or illness. However, there are significant differences between the two types of coverage that are important to understand.
Short term disability insurance is designed to cover an individual for a shorter period of time, typically ranging from a few weeks to a year. This type of coverage is often used to cover the costs of medical expenses, such as hospital stays or surgeries, as well as lost income during the recovery period. Short term disability insurance is usually more affordable than long term disability insurance and is often offered as a benefit through an employer’s group insurance plan.
On the other hand, long term disability insurance provides coverage for a longer period of time, typically lasting until the individual reaches the age of 65 or until they are able to return to work. This type of coverage is designed to provide financial support for individuals who are unable to work for an extended period due to a chronic illness or disability. Long term disability insurance is generally more expensive than short term disability insurance and is often purchased as an individual policy.
One of the main differences between short term and long term disability insurance is the waiting period. Short term disability insurance typically has a shorter waiting period, which can range from 7 to 14 days, while long term disability insurance has a longer waiting period, often ranging from 30 to 90 days. This means that individuals who purchase long term disability insurance may not receive benefits for a longer period of time than those who have short term coverage.
Another important difference is the benefit amount. Short term disability insurance usually pays a percentage of the individual’s income, typically around 60% to 70%, while long term disability insurance pays a fixed benefit amount, which is usually a set percentage of the individual’s income. This means that individuals with long term coverage may receive a higher monthly benefit than those with short term coverage.
It’s also worth noting that the eligibility requirements for short term and long term disability insurance can vary. Short term disability insurance is often available to individuals who have been employed for a certain period of time, such as six months, while long term disability insurance may require a longer period of employment, such as one year.
In conclusion, while both short term and long term disability insurance provide financial support to individuals who are unable to work, there are significant differences between the two types of coverage. Understanding these differences can help individuals make informed decisions about their insurance needs and choose the type of coverage that best suits their situation.
