Disability insurance: 3 FAQ’s on Short-term vs. long-term coverage

Insurance is a complicated subject. No matter what the type, trying to figure out what’s covered and what isn’t can be confusing. Disability insurance is no exception.

Between short-term and long-term coverage, it can be difficult to figure out which covers what, when you’ll get paid and how long those payments will last.

Here are a few FAQs on disability insurance.

Who pays for it?

It depends. Sometimes disability insurance is an employer benefit, sometimes the insured pays for it independently and sometimes people will elect to get a supplemental policy when they feel the one established by their employer does not have enough coverage.

What’s the difference between short and long-term disability?

The main differences between short-term and long-term disability are duration of payments and how long you have to wait to start receiving those benefits.

  • Short-term disability payments will start sooner, but will not last as long. Short-term disability is what will you will use when your disability is not expected to last a long time. The payments are also often bigger than for long-term disability.
  • Long-term disability payments take longer to process and take effect. While the payments last longer than for short-term disability, the amount of the payments is typically smaller.
  • It is possible to start on short-term disability and then move to long-term disability, depending on your health, specific situation and plan coverage. 

What kind of coverage do I want?

Whether you’re looking for supplemental coverage, or making the decision to sign up for coverage independently, you’ll want to consider your financial situation. You will want to ask yourself questions like, “How long will our savings last if I’m unable to work?” and “What other income will we have and what deficits will we need the insurance to cover?”

If you are looking for some extra security beyond what your employer covers, look at where the other coverage falls short and decide from there. You will want to choose an option that is affordable, and will help provide for you and your family in the event you are unable to work.

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