Your health insurance pays for your medical bills, but what about your other monthly expenses in the event that you are unable to work due to a disability? Disability insurance is meant to be a wage replacement in such cases where you cannot work due to a disability. You can purchase coverage that will cover you so long as you cannot perform the substantial duties of your own individual job, and you can buy coverage that will cover you for two (2) years, five (5) years, or until retirement age (typically age 65).
So the answer is yes, you should buy as much coverage as you can.
What Is Short-Term Disability Insurance?
Short Term Disability benefits (sometimes referred to as “STD” benefits for short) provide vital income protection to individuals immediately after the onset of a disabling condition.
Short Term Disability insurance is designed to replace a specific percentage of your pre-disability income during the first few weeks or months after the onset of a disabling illness or accident. Policies typically provide coverage for a period of six months to a year. Short Term Disability benefits are often an important source of income until Long Term Disability benefits begin. You can typically purchase Short Term Disability Insurance benefits from an insurance agent or through your employer.
Some benefits you might obtain include:
- Weekly benefit payments, which will pay you a portion of your pre-disability earnings on a weekly basis for the term length of your policy; and
- Comprehensive Rehabilitation Program benefits, which can provide benefit incentives related to vocational (job) rehabilitation, dependent (child) care, workplace modifications, and more.
What Is Long Term Disability Insurance?
Group policies covered by ERISA and private individual disability policies are designed to protect your income in the event that you are unable to work due to sickness, injury or an accident. Usually, these policies pay approximately 60% of your earnings. There is also usually built in elimination or waiting period where the benefits are not payable until a certain period after you stop working, usually after you’ve been unable to work for 90 or 180 days. A separate insurance policy for Short Term Disability benefits is typically used to pay disability benefits until Long Term Disability benefits kick in.
Why You Should Consider Long Term Disability Insurance
The United States Census Bureau has indicated that you have a 1 in 5 chance of becoming disabled before retirement age. In 1997, the Census Bureau issued the results of a study showing that more than a 152,000,000 people between the ages of 21 and 64 (which is a prime working-age for most Americans) have some form of disability. As such, this is a particular area of concern—not only for employees—but also for self-employed men and women who should seriously consider having a long term disability policy.