How important is your paycheck to you? How important is it to your family? If you became disabled, and were unable to work, what would you do?
It’s a scary thought, but at least one in four of today’s 20-year-olds will become disabled at some point before they retire, according to the Council for Disability Awareness (CDA). The organization also reports that more than 3.1 million working age Americans experienced a disabling injury or illness so far this year.
So how can you protect you and your family if you are unable to work due to an accident or illness? Either short term or long term disability insurance through your employer may be the answer. Here are three things you need to know.
1. Short term and long term disability insurance policies are different.
Simply put, short term disability covers you (as the name implies) in the short term following an injury or illness that keeps you out of work. The typical time period of coverage for short term disability is about three months. But what happens after that? That’s where long term disability comes in. Serious illnesses or conditions like cancer or a stroke could keep you out of work during treatments that could last years. Long term disability covers those situations. In fact, the average length of a long-term disability claim is 2.5 years, according to the CDA.
2. Disability insurance can help during maternity leave.
Short-term disability insurance replaces all or part of your paycheck when you have a baby. With more than a million Millennials becoming moms each year, disability insurance is an important consideration. Think of disability as the core or foundation of replacing your income during maternity leave. Some employers may cover the cost or, in other instances, you may need to pay for your own disability insurance. But most of the time, it’s a simple payroll deduction, so all you have to do is enroll during your workplace’s open enrollment period. And when it comes to maternity leave specifically, remember to think holistically about your needs. Other benefits, like hospital indemnity insurance, can offer additional protection too.
3. Plan ahead for disability insurance waiting periods.
It’s likely that your disability insurance policy will only cover a significant portion of your salary — not all of it. And there will be a waiting period before you become eligible for the policy. With short-term disability, the waiting period will most likely be around a week. With long-term disability, it’s likely between 90-180 days — however, short-term disability may be in place for all or a portion of this time. Take the time to learn the details of your particular policy and adjust your savings goals to ensure you have what you need to get you and your family through the waiting period.
Employers are the main source of disability insurance in the U.S., so it’s an opportune time to learn more about this benefit during open enrollment, especially if you’re thinking of having kids soon.
This article contains information from the Council for Disability Awareness. Learn more at disabilitycanhappen.org.