Short-Term and Long-Term Disability Insurance

Short-Term and Long-Term Disability Insurance

Disability Insurance

What is disability insurance?

Disability insurance insures the beneficiary’s earned income in case of any disability or critical illness. When the worker is incapable of work for psychological disorder or an injury  or any critical illness it encompasses paid sick leave. There are short term disability benefits  (STD) and long term disability benefits (LTD). Most common disabilities are heart disease, respiratory problems, cancer, diabetes, stroke, nervous disorder, arthritis. Disability insurance is also known as DI or disability income insurance or income protection.

Coverage of short term disability insurance

Short term disability insurance gives coverage for a limited time. The customer receive benefits after a waiting period of 14 days, and then covered for a length of specified timecan be for months up to years, the policy will indicate a maximum coverage amount. The benefits of short term disability insurance policies are:

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

Coverage of  long term disability insurance

Long term disability insurance provides coverage for injuries and illness that prevent from work. But this policy do not covers child birth, as it is not a critical illness, it can only cover the critical and major illness. IT provides coverage over a longer period of time. The most common long-term disability insurance policies are for:

  • Cancer
  • Osteoarthritis
  • Mental disorder
  • Cardiovascular
  • Injuries/poisoning

Disability insurance has variety of factors that can influence the premium. Premium of the policy generally range between 1.5% and 3% of the gross income. Age range is also a important factor, the minimum range of applicants is 18 years and maximum is 60 years. The insurance rate for women is higher than the rate of men. Generally, disability insurance has a specific monthly benefit like $3,000 a month and the benefits are paid monthly.

Social security disability program

It is a federal program that is administered by the social security administration. This provides benefits to the people limited by total disability. There are two programs in it- SSI and SSDI. SSI(supplemental security income)is a program for low income individuals or who did not earn sufficient work credits, it pays benefits based on financial need.SSDI(social security disability insurance) is for adults work history who earned enough work credits. This is funded by taxes. For SSDI the customer has to show that he is not in the previous occupation anymore. There are few states that have programs for employees with short term disability benefits. Currently there are five states with state sponsored disability plans which are funded by some contributions. The states having this programs are New York, California, Hawaii, New Jersey and Rhode Island. Each state has different guidelines for eligibility and different beneficial plans. There are also private disability program which are paid for by an individual as a part of employees’ benefits. For both social security disability and private disability insurance plan there is the possibility of receiving payments. The amount of the benefit is based on the lifetime average earning in any federal disability insurance, it is always based on income and resources.

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