In general, disability insurance provides income if something happens to you (like an illness or injury), and you can’t work. These products are typically medically underwritten, which means the younger and healthier you are, the easier it is to qualify for a policy, and the less expensive it is. However, as you age, your premiums will generally increase. Disability insurance doesn’t just cover significant accidents. Many claims are for things like physical injuries, heart attack, or cancer, which could happen to anyone working.
There are two types of disability insurance, short term, and long term. In general, the benefits provided by both are similar and replace part of your monthly salary. Even though they do the same thing, short-term and long-term disability insurance have some differences you should know about. Short term policies usually cover a higher percentage of your income (usually long term policies generally cover a lower percentage. Short term can last 3-6 months with long term potentially lasting up to 5 years or longer. Short-term policies usually payout within a few weeks of your disability, with long-term usually around 3-6 months.
As with most insurance types, there are many ways to structure a policy, and your financial and health situation will play an important role in determining which policy is right for you.
