Many employers offer disability insurance options for their employees. These policies can serve a vital need if you are injured or face a debilitating illness. For example, they can replace income and help cover medical bills. Understanding the differences between short term vs long term disability coverage can help you choose the right policies for your personal financial situation.
Short Term Disability Coverage
Most short-term policies offer coverage for up to six months. They tend to be affordable to purchase, which makes them an attractive option for employee benefit packages. Payouts in these policies are often graduated, with the highest payments made in the first few weeks, and the remaining ones tapering off until the benefit maximum is reached. The waiting period for new employees to qualify for benefits can be as short as a few weeks.
Long Term Disability Coverage
When an illness or injury affects your ability to work for longer than six months, you would need to use long-term disability coverage. This can be slightly more expensive than a short-term plan but is still relatively affordable. Waiting periods tend to be longer, with most offering coverage after about six months. The payments received under long-term disability tend to remain stable over time.
Both types of coverage replace income and provide a safety net for employees who are unable to work for medical reasons. Learning the differences between them can help you choose the right plan for your needs.