Types of Disability Insurance: Short-term vs. Long-term Coverage

Regardless of how careful or risk-averse a person may be in maintaining their health and wellness, unavoidable accidents, illnesses and other ailments may impact their ability to work and, subsequently, their livelihood. Disabling health issues can be particularly problematic, as a person may lack the ability to conduct their usual work-related responsibilities, potentially limiting their ability to earn income and provide for themselves and their families.

Fortunately, planning for these difficult situations is possible by purchasing and maintaining adequate disability insurance. These coverage options can prove to be invaluable investments, but understanding various types of disability insurance and selecting the right policy can be complicated. With this in mind, Burns Employee Benefits Insurance Services LLC stands by to assist with comprehensive guidance.

What Is Disability Insurance?

Disability insurance is designed to replace a portion of an individual’s income if they are unable to work because of a severe illness or injury. The benefits are paid directly to the insured, allowing the individual to cover their expenses with no limitations on how the money can be spent. This can help provide financial security and peace of mind for individuals and families if an insured suffers an illness or injury and is unable to work as a result. These policies can often be purchased as individual coverage through an insurance company or offered as an employee benefit through an individual’s employer.

What Are the Differences Between Short- and Long-term Disability Insurance?

There are two primary types of disability insurance. When weighing their options, aspiring policyholders should familiarize themselves with the following classifications:

• Short-term disability insurance—As its name suggests, this type of disability insurance generally offers coverage and financial assistance for a more abbreviated period of time than its long-term counterpart. In many cases, short-term disability insurance may render aid to replace a set percentage of their income and assist with disability-related costs for several weeks or months, although some policies can pay out for up to 2 years.

• Long-term disability insurance—These policies may offer payouts to offset lost income and assist with expenses arising from disabilities for many years. In some cases, coverage may even last the remainder of an insured’s life. This can be critical, as a permanent disability may keep a person from ever returning to their previous profession, potentially necessitating a form of long-term income replacement.

In addition to the differing timespans benefits may be provided, short-term disability insurance policies usually have a shorter waiting period before benefits begin to pay out.

Why Is Disability Insurance Important?

Disability insurance can be a critical investment in establishing financial security for policyholders and their families. Adequate coverage can foster peace of mind by providing insureds with a much-needed safety net, allowing them to pay bills and provide for their loved ones when they’re unable to work.

We’re Here to Help

With an extensive track record of serving the Oakland, California, area, Burns Employee Benefits Insurance Services LLC is ideally positioned to assist with disability insurance needs. Visit our website or call 510-652-7609 to learn more.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.