Disability income insurance, or DI insurance, ensures people maintain an income if they lose their ability to work. There are several vehicles in which to obtain disability income insurance. For instance, disability income is often a component of group insurance. Through an employer, you can get long-term disability income, which can see you through until about age sixty-five, depending on where you work. Employers also offer short-term disability income insurance, which typically has a maximum of two years.
The difference between a long-term and short-term disability income plan is the elimination periods. Essentially, an elimination period occurs after you become disabled and before the benefits kick in. This health insurance type, for short-term plans, usually has a 0/0 clause. In other words, there are no waiting periods for sicknesses and accidents. In some cases, this health insurance type has a thirty-day waiting period. As for long-term, the period can be anywhere from 30/60/90 days to six months, and sometimes up to a year for this health insurance type. Because of the different waiting periods, you can have both short-term and long-term disability income insurance. This strategy will ensure continuous coverage in addition to helping lower premiums, making both more affordable.
With group disability insurance, you must know that it does not always cover disabilities incurred on the job. Some plans do, but not all. Because most group disability plans do not cover on-the-job accidents or illnesses, they’re generally inexpensive. So, remember that while the plan may be cheap, it may not provide the coverage you need.
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This article was revised on 5/9/24.