Long term and short term disability insurance are two types of insurance coverage that provide financial protection in the event of a disability. While both types of insurance serve the same purpose, there are some key differences between them.
Short term disability insurance is designed to provide coverage for a shorter duration, typically ranging from a few weeks to a few months. It is intended to replace a portion of your income if you are unable to work due to a temporary disability, such as an illness or injury. Short term disability insurance typically has a waiting period before benefits begin, which can range from a few days to a few weeks. The benefit period is usually limited, often ranging from 3 to 6 months. The coverage amount is typically a percentage of your pre-disability income, such as 60%.
Long term disability insurance, on the other hand, is designed to provide coverage for a longer duration, often until retirement age. It is intended to replace a portion of your income if you are unable to work due to a long-term disability, such as a chronic illness or a permanent injury. Long term disability insurance typically has a longer waiting period before benefits begin, which can range from a few months to a year. The benefit period can be several years or until you reach a certain age, such as 65. The coverage amount is also typically a percentage of your pre-disability income.
In summary, the main differences between long term and short term disability insurance are the duration of coverage, the waiting period before benefits begin, the benefit period, and the types of disabilities covered. Short term disability insurance provides coverage for a shorter duration, has a shorter waiting period, and is designed for temporary disabilities. Long term disability insurance provides coverage for a longer duration, has a longer waiting period, and is designed for long-term disabilities. It's important to carefully review the terms and conditions of each policy to understand the specific coverage and limitations.