Disability insurance
Ways to keep getting paid, even when you can’t work.
Disability insurance is insurance that will pay out regular paychecks in case you become too ill or disabled to work. There are several kinds of disability insurance — some provided by your employer, some you purchase yourself — and they all offer slightly different coverage and benefits for different situations.
Long-term disability insurance
Short-term disability insurance
Short-term disability insurance
Long-term disability insurance is the most cost-effective and comprehensive type of disability insurance, plus it can be purchased whether you work for an employer or for yourself.
Long-term disability insurance is a type of insurance you can buy that pays out monthly benefits if you become too ill or disabled to work. The benefit period can last two, five, or 10 years, or even until retirement, and the monthly benefit is up to 60% of your gross monthly income. The yearly cost generally is 1% to 3% of your annual salary.
Short-term disability insurance
Short-term disability insurance
Short-term disability insurance
Short-term disability insurance replaces a portion of your paycheck — up to 80% of your pre-tax income — if you can’t work due to illness or injury for a short period of time, up to one full year.
Short-term disability policies are often offered by your employer, and some states require that employers provide short-term disability coverage.The waiting period, or time before benefits are paid out, for short-term policies can be just a few weeks, so short-term policies can often cover living expenses while you’re waiting for your long-term policy to go into effect.
Since the average disability time is about three years, short-term disability isn’t an alternative to long-term disability coverage.
Short-term disability costs about the same as long-term disability (1% to 3% of gross income).