Basics of Short-Term and Long-Term Disability Insurance

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    Short Term vs long term

    Working in any industry, employees often risk facing different unexpected and dangerous injuries, and they want to know whether they can still have income during their recovery process. As an employer, you should know these risks and offer short-term and long-term disability insurance options to your employees. With these insurance policies, your employees will not need to worry about being without pay when they are sick or injured.

    Short-Term Disability (STD)

    Short-term disability (STD) is a type of policy that pays a percentage of employee’s salary for a particular amount of time, in case they are ill or injured, and cannot perform the duties of their job. The benefit is usually about 40 to 60 percent of the employee’s weekly gross income. The coverage typically starts from 0 to 14 days after the injury or illness leaves the employee unable to work. The time of coverage can vary from three months to six months or one year from eligibility.

    A short-term disability policy can be an employer or employee paid benefit. However, short-term disability coverage is usually employer-paid. Many employers offer a short-term group plan as a company-paid benefit to all employees.

    Short-term disability insurance policies pay out benefits for reasons such as the following:

    • A lengthy illness
    • A disabling injury
    • The birth of a child

    Long-term disability (LTD)

    Long-term disability (LTD) insurance covers a portion of an employee’s income about 50-70% when the employee becomes injured or seriously ill and can’t work for an extended period. It usually starts after a short-term disability policy has run out. It usually lasts longer, typically, two years, five years, ten years, to age 65, or for life, depending on the policy as well as the situation. This happens around 10 to 53 weeks after an eligible event.

    The Council for Disability Awareness lists the most common long-term disability claims as:

    • Musculoskeletal/connective tissue disorders (back pain, osteoarthritis)
    • Cancer
    • Injuries/poisoning
    • Cardiovascular/circulatory disorders (heart attack, coronary artery disease)
    • Mental disorder

    Long-term disability insurance does not cover child birth.

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