Short-Term versus Long-Term Disability Insurance Coverage (2024)

FAQs

Short-Term versus Long-Term Disability Insurance Coverage? ›

Short-term policies are designed to provide benefits almost immediately for temporary disabilities. In contrast, long-term policies have a considerably longer waiting period, but they provide coverage over a longer term for more serious illnesses or injuries.

Short term disability is intended to cover you immediately following a serious illness or injury, and long term disability insurance is intended to maintain income replacement if your condition keeps you out of work past the end of your short term disability benefit period, even to retirement, depending on your plan.

Short-term disability insurance is a good way to replace your paycheck without draining your savings if you're injured or sick and can't work. Short-term disability insurance only lasts for a few months, so having a long-term disability insurance policy is the best way to fully protect yourself.

If you become disabled, your ability to generate income may be severely impacted. Long-term disability insurance benefits can help you meet ongoing financial obligations and continue supporting your family.

For short-term disability, benefits begin after a predetermined amount of time, called an elimination period, ranging from seven to 30 days, with 14 days being the average. The elimination period for long-term disability is longer, lasting anywhere from 30 days to two years, with 90 days being the most common.

Long-term disability insurance covers you by replacing your income while you're not able to work, though how exactly you're covered depends on your policy. Long-term disability can cover things like: An illness that causes you to lose your sight. Severe anxiety or depression that keeps out of work.

How Long Should My Benefit Period Be? A benefit period is the amount of time you'll receive payouts once they begin. For long-term disability insurance, Dave Ramsey suggests a benefit period of at least 5 years and up to age 65 if you can cover that financially.

People With Recurring Injuries or Illnesses. Do you suffer with recurring health issues, like back problems, chronic diseases and disorders, or nagging injuries? These conditions can cause you to miss work for an extended period of time. If that's you, then you may want to consider purchasing disability insurance.

However, short-term disability can be a valuable asset for almost anyone wanting a safety net if they become ill or injured for a few weeks to a few months. Ask your employer if they offer Aflac short-term disability insurance and apply immediately to give yourself extra financial security.

At what age should you drop disability insurance? Disability insurance helps protect your income, but if you need to cancel it's best to do so when you're closer to retirement age since benefits typically stop when you turn 65.

When should I stop buying long term disability insurance? ›

Long-Term Disability Insurance

Anything over two years and up until retirement age is considered a long-term policy (but you could extend it into retirement if you wanted to). And whether you're working at a desk or a construction site, you'll want something in place until you turn 65.

Is disability insurance tax-deductible? Premiums are not tax-deductible for disability insurance. You cannot claim long-term disability premiums on your personal tax return.

Short-term policies are designed to provide benefits almost immediately for temporary disabilities. In contrast, long-term policies have a considerably longer waiting period, but they provide coverage over a longer term for more serious illnesses or injuries.

Short-term disability is a weekly benefit with a limited duration – up to one year maximum in most cases. Long-term disability, on the other hand, is paid monthly and employees may receive benefits until they reach Social Security normal retirement age (SSNRA) or age 65.

Short-term insurance is usually renewed every year. Long-term insurance protects something even more valuable than your belongings. It covers your life or your ability to earn an income. Long-term insurance policies include policies like funeral cover, life insurance, disability cover and income protection.

Short-term goals are likely measured by weeks, months, or quarters. Long-term goals can be measured by years and may have an undefined timeline. It is much easier to achieve short-term goals because you can easily see progress. Long-term goals are difficult and require patience as there is no immediate obvious payoff.

Short-term disability insurance, also known as temporary disability insurance, can provide monthly payments if you are too sick or injured to work. You can expect to receive about 40% to 70% of your monthly income until you are able to return to work or until the end of your benefit period — whichever comes first.

Calculating Benefit Payment Amounts. Your Weekly Benefit Amount (WBA) depends on your annual income. It is estimated as 60 to 70 percent of the wages you earned 5 to 18 months before your claim start date and up to the maximum WBA. Note: Your claim start date is the date your disability begins.