Short-Term vs. Long-Term Disability Income Insurance

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You may be familiar with the basic concept of disability income insurance. But have you considered short-term vs. long-term disability income insurance and how it could apply to you?
Disability income insurance provides income if you get sick or injured and can no longer work. The monthly payments can help pay for things like bills and groceries. Depending on the length of your disability, short- or long-term coverage may be useful.

What is the difference between short-term and long-term disability income insurance?

Like the name implies, the difference is in how long you’re covered.

Short-term disability income insurance works by replacing your income for a short period of time. The payments you receive from short-term disability income insurance usually last less than 1 year. Typical situations covered by short-term disability income insurance include:

• An injury that prevents you from being able to work
• Prolonged illness
• Childbirth

Long-term disability income insurance helps protect you for a greater length of time. These policies typically replace lost income for those who are disabled more than 6 months. Typical situations covered by long-term disability income insurance include:

• Serious illness, such as cancer
• Serious medical events, such as heart attacks
• Mental disorders

Choosing between short-term vs long-term disability income insurance

When comparing short-term and long-term disability income insurance, there are a few things to keep in mind:

How long can you go without income?

• You should consider how long you are comfortable without a paycheck. You need to factor in your family members and anyone else who depends on you.
• If you have savings to cover a few months of lost income but nothing more, long-term disability income insurance may be worthwhile.
• If you have no emergency savings or you are the only income in your home, you may be more comfortable with both.

Cost

• Short-term disability income insurance is often less expensive than long-term. But that doesn’t always mean short-term is a better deal.
• It may make financial sense to purchase short-term disability income insurance instead of long-term if you are not the breadwinner.
• If you have a family history of serious illness, long-term disability income insurance may be worth the cost to help provide you with some peace of mind.

Does your employer provide any disability income insurance?

• Check to see what your employer provides. If your employer provides both types at the level of coverage you need, then you can just sit back and relax. If your employer provides only one type or not enough coverage with their plans, you may want to research further. You could also supplement your plan or choose one outside of your employer.

What about getting both short-term and long-term disability income insurance?