The Benefits of Disability Insurance – Short Term and Long-Term disability
We all strive to never become seriously ill or injured, however things happen, and it is better to be prepared than not. One way you can prepare yourself and your family is to have short term or long-term disability insurance in place through an employer or as an individual.
What is Disability Insurance?
Disability insurance can provide financial assistance to you and your family if you were ever to become seriously ill or injured. Disability insurance can protect you by replacing a portion of your income. You receive this benefit if you were ever diagnosed with a covered medical illness, mental health issue, or injury that prevents you from working.
While Disability insurance is a type of health insurance like critical illness insurance, it is different in that it is directly tied to your ability to work and produce an income. There are many different types of disability insurances, from group plans to individual plans to government provide plans like ones covered under CPP, we will be focusing on the differences between Short-Term and Long-Term Disability Insurance and how they can benefit you.
Short-Term Disability Insurance
Short-term disability covers a portion of your income, usually up to a maximum of six months if you were to become ill or injured. The waiting period before receiving benefits is typically shorter than other types of disability benefits like long-term.
Long-Term Disability Insurance
Long-term disability has a longer waiting period before benefits start, and usually only begin when one of the following ends:
• short-term disability insurance
• sick leave from your employer
• EI sickness benefits
Many long-term disability benefits pay between 60% and 70% of your normal income. While each policy is different, some will pay up to 2 years while you recover from your injury or illness and unable to work.
So how could disability insurance benefit you?
Disability Insurance can help pay the bills when your income stops due to illness or injury. Even if you don’t work a physically demanding or risky job, disability insurance can help you in the event of other conditions.
For example, let’s say you are diagnosed with serious depression and are unable to work because of it. You could receive a portion of your income from your policy which will allow you to take time off work and focus on your mental health. Another excellent example of how Short-term and long term benefits can help you and work in tandem together is provided by Benefits and Design. Click the link here for the detailed infographic.
Things to consider before getting Disability Insurance
If you are self-employed, it may be a good idea to get an individual disability insurance plan. However, if you are employed, check with your employer or plan administrator to see if you already have short-term or long-term disability insurance.
Some things to look out for if you are searching for an individual plan:
• how much the policy will cost
• if you still need to pay premiums while living with a disability
• the amount of money you'll get each month
• if the benefits are taxable
• if the insurance company adjusts benefits for inflation
• how long you need to wait before receiving benefits
• if the plan includes partial disability benefits
• if the insurance company allows you to increase your coverage without a medical exam
Also, each insurer may define disabilities a little differently. The definition may vary from different plans from the same insurer, so be sure to look over each one before purchasing.
If you have any questions, would like some guidance on finding an individual plan for you or to check if your health benefits currently include LTD or STD insurance, please reach out by contacting us here.