SHORT VS. LONG TERM DISABILITY INSURANCE COVERAGE IN MINNESOTA
Jan. 6, 2016
Choosing a disability insurance plan can be a daunting, confusing task. That’s why its important to understand the differences between plans to choose the one that best suits your needs and goals.
Disability insurance is designed to provide a safety net in the event that you become disabled and are no longer able to perform the job that had provided your livelihood. You can acquire disability insurance through an employer, a union, a professional organization, or you may choose to purchase an individual plan. There are a wide variety of individual plans, but most broadly, they fall into two categories: short term disability (STD) or long term disability (LTD). These two types of plans differ in several areas, so it’s important to understand the disparity when choosing which plan is right for you.
Waiting Period. The waiting period is the amount of time that must pass between the beginning of your disability insurance and the time that you are paid your benefits. As a general rule, the higher your premium, the shorter your waiting period will be. There are variations within this general rule: for instance, the same plan may have a 7 day waiting period for certain illnesses, but no waiting period for accidents. Most LTD plans have a waiting period of between 30 and 180 days.
Benefits Rates. The benefits rate is the amount of money your disability insurance provides you per month. Acquiring a disability can cause a person to incur many additional living costs, including assistive care, medical costs, and special equipment. It’s important to be realistic about the amount of money you would require to live should you become disabled. Most people aim for coverage that would provide approximately 60% of the money that they use in their non-disabled lives.
Benefits Period. The benefits period is the length of time that your insurance policy will provide you with coverage in the event that you become disabled. In general, the longer the benefit period, the higher the insurance premium will be. STD plans provide coverage for up to 12 months, while LTD plans can cover many years, or can last until the recipient reaches a retirement age. Some people who feel uncomfortable with the brevity of the benefits period provided by their employer’s insurance may choose to purchase additional insurance to lengthen their benefits period.