Why You Need Short- and Long-term Disability Coverage

Nobody plans on becoming disabled and missing work, but it can happen. An illness or an accident could cause you to be unable to work for months, or even years.

While you health insurance will cover their medical expenses, it won’t cover the cost of living while you recover.

Only 30% of American workers in private industry currently have access to employer-sponsored long-term disability insurance coverage, according to the U.S. Bureau of Labor Statistics.

That means most workers – and their families – do not have adequate protection against one of the most significant financial risks that they face.

That’s why you need your own short-term and long-term disability insurance.

These policies provide income replacement to enable individuals who can’t work to pay the bills, including mortgages and college expenses, and to maintain their standard of living.

Disability insurance replaces a percentage of pre-disability income if an employee is unable to work due to illness or injury.

There are various policies to choose from, including short-term disability coverage, long-term disability coverage, or integrated short- and long-term coverage.

Disability policies have two different protection features that are important to understand:

Non-cancelable– This means the policy cannot be canceled by the insurance company, except for non-payment of premiums. This gives you the right to renew the policy every year without an increase in the premium or a reduction in benefits.

Guaranteed renewable– This gives you the right to renew the policy with the same benefits and not have the policy canceled by the company. However, the insurer has the right to increase the premiums.

Policy Options

In addition to the traditional disability policies, there are several options you can choose from:

  • Additional purchase options. The insurer gives you the right to buy additional insurance at a later time.
  • Coordination of benefits. The amount of benefits you receive from the insurance company is dependent on other benefits you may receive because of your disability.The policy specifies a target amount you will receive from all the policies combined, so this policy will make up the difference not paid by other policies.
  • Cost of living adjustment (COLA). The COLA increases disability benefits over time based on the increased cost of living measured by the Consumer Price Index. You will pay a higher premium if you select the COLA.
  • Residual or partial disability rider. This provision allows you to return to work part-time, collect part of their salary and receive a partial disability payment if you are still partially disabled.
  • Return of premium. This provision requires the insurer to refund part of the premium if no claims are made for a specific period of time declared in the policy.
  • Waiver of premium provision. This clause means that you do not have to pay premiums on the policy after you are disabled for 90 days.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.


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