Short-Term vs. Long-Term Disability: How to Manage the Different Risks

​What’s your biggest financial risk? Job loss? An economic downturn? Perhaps a medical emergency or costly repair to your home? You’ve probably taken steps to prepare yourself for all these possibilities and to minimize your exposure.

However, there’s one type of risk you may not be protected against. It’s disability. According to the Council for Disability Awareness, more than 25 percent of all working adults will experience disability at some point in their lives. That could be problematic, as more than 51 million Americans don’t have any disability coverage and more than half wouldn’t be able to support themselves for three months.1
 
Not all disability is the same. Disabilities generally fall into one of two categories: short-term or long-term. Both types are more common than you would think, and the protection strategies for each type are unique and distinct. It’s helpful to understand the different threats so you can develop a protection strategy.
 
Below are common questions and answers about short- and long-term disability. A financial professional can also help you analyze your risk exposure and implement a coverage plan.
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What is short-term disability?
 
Short-term disability is generally described as an injury or illness that prevents you from working for several weeks or months. Many short-term disability insurance policies will provide benefits for up to six months. If the disability extends beyond that time frame, it’s usually considered long-term.
 
Short-term disabilities are often caused by accidents, but they can also be caused by a serious illness like heart disease. For women, pregnancy and childbirth can lead to a short-term disability if their employer doesn’t offer paid maternity leave.
 
If you’re injured at work, you may be able to qualify for workers’ compensation. However, keep in mind that workers’ compensation claims aren’t automatically approved. Also, don’t count on Social Security to cover a short-term claim. Social Security disability benefits are notoriously difficult to obtain, and they’re usually reserved for serious long-term disability claims.
 
Many employers offer group short-term disability coverage as a standard part of their benefit package. However, not all do. If yours doesn’t, you may want to look into an individual policy that replaces a portion of your income if you’re physically unable to work. These policies are generally affordable relative to the level of protection they provide.

What is long-term disability?
 
A long-term disability is one that extends beyond six months. Often, long-term disabilities last for years, if not for life. They can be caused be a wide range of issues including cancer, heart disease, back or joint issues, cognitive disorders and much more.
 
Social Security offers disability benefits for those who suffer serious long-term injuries or illnesses. However, it can be difficult to qualify for benefits. Even if you do qualify, it’s unlikely the benefit would cover your full expenses. The average monthly benefit is just under $1,200 per month.2
 
The most effective form of protection against long-term disability is an insurance policy that replaces a significant amount of your income. While this coverage is sometimes available through an employer’s benefit program, you may be better served by an individual policy. You can adjust the policy to align with your needs and budget. A financial professional can help you find the right policy for you.
 
Ready to develop your strategy? Let’s talk about it. Contact us today at Financial Solutions Group. We can help you analyze your risk exposure and create a plan. Let’s connect soon and start the conversation.
 
1http://disabilitycanhappen.org/disability-statistic/
2https://www.disabilitysecrets.com/how-much-in-ssd.html
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18185 - 2018/10/22