Disability insurance is insurance that will provide you with income if you become sick or injured to the point that you are unable to work. If you want an overview of how disability insurance works, you can read the Fundamentals of Disability Insurance. There are many different terms that you need to be familiar with. Two of these are short term and long term policies. In this article, we will go over the differences between these two policies and how they affect you when choosing disability insurance.att
Short Term Disability Insurance
Short term disability covers you for just what you think it would, a short term. Your benefit period will be somewhere between 30 and 120 days. Usually, this type of insurance is only available through your employer. If your employer does not offer it, you will have to self-insure. This means saving enough to cover the time period a short term policy normally would. A short term policy will kick in fairly quickly after a qualifying disabling event.
Long Term Disability Insurance
A long term disability policy is designed to replace your income for a much longer period of time. You may choose a policy that covers you for several years, or all the way until you reach retirement age. This type of coverage is not always provided through your employer cost-free. So, if you desire to have it, you will have to purchase it yourself. Long term policies also will have a long waiting period or amount of time you must wait until you can begin receiving benefits. For long term policies, the waiting period will be between 3 and 6 months. The shorter the waiting period you choose, the more expensive your premium will be.
Coordinating Long Term and Short Term Policies
Your long term and short term disability policies should work together, it should not be an either/or situation. Your short term policy should be enough to cover you during the waiting period of your long term policy. It is important not to leave a gap between your short term and long term policies. This is the case because the bigger of a gap you leave, the longer you will have to go without replacement income. It will also mean you will have to draw from your savings during that time to cover your expenses.
Choosing Disability Insurance-Purchasing a Policy
When you are shopping around for a policy, there are a few factors you should be aware of. The first is what the premium is based on. Your premium will be based on your age, sex, occupation, length of your coverage period, and how much of your salary you want to replace. You should expect to spend between 1% and 3% of your income on disability insurance premiums. If you are purchasing a policy from your employer, the pricing will be different. It will be based on group rates, which will help reduce your cost. If you are unsure where to start looking for a policy, meet with a qualified insurance agent. They can help you with choosing a disability insurance policy that will fit your needs.
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