Guardian Disability Insurance Brokerage

Differences Between Short & Long Term Disability Insurance

by Thomas Lloyd

The basic function of having disability insurance is to protect the loss of income when a person suffers an injury or illness that prevents them from working. The two most common areas to find disability insurance are either through an employer group plan or to purchase coverage individually through someone who specializes in disability insurance. There are inherent differences between a group disability plan and an individual plan that should be considered by the individual but the most apparent distinction is the offering of short and long term disability inside a group plan.

What is Short Term Disability Insurance?

This coverage provides a benefit to the insured after day 1 of an injury or illness that prevents them from working and continues for either 3 months, 6 months, or a year - depending on what the company decides to choose for its employees.

How can I get Short Term Disability Coverage?

Typically, the only way to obtain short term disability insurance coverage is through a company plan at work. Employers and insurance companies design each plan differently so now two plans are always alike. It is always wise to check into whether it is available through your human resources department. If your company does not offer it, you may be limited in available options for individual coverage.

How can I get maternity leave benefits?

The only way to secure benefits for maternity leave is through a company plan. For the limited number of carriers that offer short term disability insurance on an individual basis, they all exclude benefits that relate to maternity leave.

What is Long Term Disability Insurance (ltd insurance)?

This coverage provides a benefit if the insured still cannot work due to an injury or illness after there short term coverage ends. Each group ltd plan lines up with its short term plan and pays out to age 65 in most cases. Long term disability insurance policies are widely available for individuals with a variety of options to fit the insured’s needs. If your company does not have disability insurance and you want it - this is the most common plan available on the market today. Additionally, many key employees will use individual coverage to add on top of their group ltd plan for a proper level of income protection. This is necessary because most group plans cap their benefits that may not provide enough income replacement protection for someone who has a high salary. These are generally referred to as supplemental disability insurance plans.

Where can I purchase my own disability insurance policy?

A simple and convenient place is to search out insurance firms that specialize in disability insurance sales. There are a variety of websites online to obtain free disability insurance quotes simply by disclosing your sex, age, occupation, salary, and residing state. Additionally, you can ask for a referral from your insurance broker who handles your homeowners, auto, etc. It is a strong recommendation you educate yourself on the differences between each disability insurance quote you review. Price is not the variable to determine which carrier provides the best coverage. Disability Insurance follows the mantra, ‘you get what you pay for’ very stringently. Ensure you enlist the assistance of a disability insurance specialist who can tell you why a certain plan fits your needs or do your homework.

These are the basic differences between short and long term disability insurance plans. Talk to your companies HR manager for your own companies benefits package to ensure you have some form of disability insurance coverage. If you don’t at work - take the time to obtain your own individual policy. Disability Insurance is a very important benefit to have during your working years and the earlier you get it - the cheaper the cost generally is.