What Is Short- and Long-Term Disability Insurance and Do You Need It?
- What is short- and long-term disability insurance?
- What is covered by short- and long-term disability insurance?
- What is not covered by a disability insurance plan?
- What companies offer short- and long-term disability insurance?
- How much does short- and long-term disability insurance cost?
- Pros and cons
- The bottom line
What is short- and long-term disability insurance?
|Header||Short-term disability insurance||Long-term disability insurance|
|Length of coverage||Typically 3 to 6 months||5 years or more, possibly to retirement age|
|Amount of coverage||Up to 70% of your income||Between 40% and 70% of your income|
|Length of waiting period for benefits to start||Approximately two weeks from the date of disability confirmation||Typically between 90 and 120 days|
|Cost||Between 1% and 3% of your annual income||Between 1% and 3% of your annual income|
What is covered by short- and long-term disability insurance?
What is not covered by a disability insurance plan?
What companies offer short- and long-term disability insurance?
Mutual of Omaha
How much does short- and long-term disability insurance cost?
Pros and cons
- Disabilities can happen to anyone. According to the Social Security Administration, approximately 1 in 4 of today’s 20-year-olds will become disabled before they reach age 67. Having disability insurance coverage could help you weather a financial storm.
- You protect your loved ones from debt. By having a disability insurance plan, you can continue to provide for your loved ones while helping keep debt to a minimum.
- Disability insurance benefits can supplement government-administered benefits. If you receive disability insurance benefits through the Social Security Administration, you can still receive benefits from your private insurance plan.
- If you have healthy savings, don’t pay for short-term disability insurance. Because short-term disability insurance only covers up to six months, you’re better off building up your savings equal to three to six months of your income so you have a cushion when you need it. Plus, you can access your savings right away without the hassle of filing a disability claim with the insurance company.
- Not all medical conditions qualify as a disability. If your injury is self-inflicted or is incurred at work, your disability claim may be denied. There also may be limitations or exclusions if you have pre-existing conditions, particularly for short-term disability insurance coverage.
- Private disability insurance could affect government-administered benefits. If you qualify for disability benefits through the Social Security Administration but you exceed the monthly income limits as a result of your disability insurance benefits, you could receive reduced or no benefits through Social Security.
The bottom line
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