What Are the Benefits of Disability Insurance Outside Work?
Disability insurance provide income protection if you cannot work due to illness or injury. Your employer might offer disability coverage as a benefit, but you also can buy the coverage on your own, outside work.
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Fun Fact
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According to the Social Security Administration, a 20-year-old workers has a 30 percent chance of becoming disabled before reaching retirement age.
Short-Term Disability Insurance
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Short-term disability insurance provides benefits to employees recovering from a temporary medical condition. These benefit periods can last up to a year, and waiting periods can be as short as seven days or even waived, depending on the condition.
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Long-Term Disability Income
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A long-term disability (LTD) plan covers employees whose medical condition will keep them out of work for longer than a year. Some long-term policies pay disabled workers until they reach retirement age. The waiting period for LTD insurance to kick in can be as much as two years, according to Metlife.
Protection
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If your injury or illness is job-related, you can get paid through worker's compensation. A disability policy covers injuries or illnesses that occur outside of work; these are not covered by worker's compensation.
Income
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Disability insurance pays a percentage of salary, usually 55 percent to 65 percent, during the benefit period. Policies don't cover 100 percent of salary, so that employees are encouraged to return to work. If your employer provides disability coverage as a benefit, but the salary replacement level is too low, you can buy your own coverage to help bridge the gap.
Portable
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If you buy an individual disability policy, you can keep the coverage even if you change jobs.
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