When a person becomes disabled and is unable to work, this can be a financially devastating situation. However, if you are covered by disability insurance, this can help with paying your regular household expenses and make your time off from work less stressful.
Many employers offer disability insurance to their employees or you can purchase it directly from companies that sell it. There are two different types of disability insurance and these are the ways they can be beneficial.
Short Term Disability Insurance
Short term disability is designed for those who are unable to work and earn a regular income for a short period of time. Depending on the company the policy is through, short term disability normally covers a person being off sick from work for up to a year. However, the person may be required to be unable to work for a minimum number of weeks as well.
Short term disability covers a variety of different illnesses or injuries. The person must be unable to work at their normal place of employment as they did before the illness or injury occurred. While not really considered an illness or injury, time off due to pregnancy is also a covered condition by some short term disability providers.
Long Term Disability Insurance
If a person is still unable to return to work after the short term disability time frame has ended, he may be able to begin receiving long term disability benefits. Long term disability insurance normally covers the same illnesses and injuries as short term disability. However, long term disability insurance provides payments for longer periods of time.
The length of time a person can receive long term disability depends on the company that the policy is with. Some long term disability insurance companies provide payments for a certain number of years, until the person reaches a certain age or even for a lifetime if they are permanently disabled.
Short term and long term disability insurance does not usually pay the full amount of what one would earn if they were able to work at their job. While the amounts can vary with each disability insurance company, short term and long term disability commonly pays 60-80% of the person's regular earned income.
The payments may be disbursed on the schedule that the person received their paychecks or on a different schedule according to the terms set by the company providing the coverage.
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