Each year around 5% of working Americans will experience a need for short-term disability. Many of those do not have adequate disability coverage.

If you experience an event that causes disability, short or long term, it is important to have an insurance policy in place. Otherwise, you will be completely reliant on your savings.

Understanding short-term vs long-term disability benefits can help you decide your best course of action.

Keep reading to learn more about the difference between these two types of disability insurance.

Elimination Period

The elimination period is the time between when your disability begins and when you start to receive payment from your insurance policy.

The elimination period for short-term disability averages 14 days. This fast turnaround between loss of income and receiving benefits is one of the main pros of short-term disability.

With long-term insurance, the elimination period can vary more widely. The average elimination period is 90 days but could be as much as 6 months to a year.

Benefit Period

Another clear difference for long-term vs short-term disability is the benefit period.

Short-term disability benefits are meant to help temporarily, usually about three to six months.

Long-term disability benefits are measured in years. Policies can vary in length, the most common being:

  • 2 years,
  • 5 years,
  • 10 years,
  • to retirement age,
  • or lifetime benefits.

Coverage During Benefit Period

Different disability insurance types pay out different amounts in coverage.

You may be surprised to learn that short-term disability pays out a higher percentage, up to 80% of your salary. Long-term insurance averages between 40-60% of your salary.

It’s important to note that while short-term disability pays out a higher percentage, it does so only for the 3-6 month benefit period.

Short-Term vs Long-Term Disability Cost

The cost for long-term disability vs short-term disability is actually pretty similar.

You will spend the same average of 1-3% of your annual salary to pay for either short-term or long-term insurance.

Employer Benefits Sometimes Offer Short-Term Disability

Be sure to check if your employer offers short-term disability benefits. These policies are often either covered by the employer or offered at a group discount rate. This makes short-term insurance more accessible for many Americans.

Understand All Long-Term Disability Benefits

The price for long-term disability varies more widely based on your chosen elimination period and benefit period coverage.

Sime policies specify differences between all occupation disability and own occupation disability.

All occupation disability would only pay benefits if you can’t work at any job, at all.

Own occupation disability would pay if you can’t work at your own job. You would still receive benefits even if you could work a different job while recovering.

Understanding Your Policy Terms is Crucial

Know the difference between short-term vs long-term disability insurance and pay attention to what each policy offers. Prepare your finances according to the policy you choose. Enjoy the peace of mind that comes from being prepared.

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