What is the Difference Between Short and Long Term Disability Insurance?

Insurance is a safety cover that people take to protect their valuable belongings, and to almost all people, there is nothing more precious than the life of a dear one. That is why individuals purchase term plans. 
 

But how can a term plan protect the lives of your dear ones? The answer is simple; it gives them crucial financial cover in your material absence. This financial cover can help them deal with the loss of earnings, payment of debts and other financial liabilities.
 

However, what if a person does not face demise but loses his ability to earn a living? That is where a disability insurance plan comes into play. A disability insurance plan can be for short-term and long-term coverage. 
 

Read this blog to learn more about disability insurance, how it works, and the difference between short and long-term disability.

What is Disability Insurance?

As the name suggests, disability insurance is a coverage where the insurance provider pays out if you become disabled to work and earn a living. Generally, such disabilities are the result of an accident or disease, and having a disability insurance policy can significantly help in this case. Depending on the policy coverage, disability insurance may also cover any medical bills for your treatment. 
 

Top Features of Disability Insurance

Here are some of the top features of disability insurance:
 

• The insurance company cannot cancel your disability insurance, and you can always renew it. However, the insurer can increase the premium. 

• Disability insurance comes with the COLA feature that calculates your consumer price index to determine the cost of living, and the policy coverage will increase depending on that. However, your premium may also increase.

• If you do not make claims within a certain period of time, you can get a portion of your premium back with the Return of Premium feature. 

With all that said, you should always read the policy document to know the extent of policy coverage. 

What are the Types of Disability Insurance?

If you wish to opt for a disability cover insurance plan, you generally have two choices: 
 

• Short-Term Disability Insurance 

  These plans cover you for a short time, generally from 3 months to 2 years. Within the coverage span, you can take the benefits until you have recovered or exhausted the limits. 
   

  Often, the disabilities covered by short-term disability insurance are the results of a disease or an accident and are fully recoverable. For example, inability to walk temporarily because of an accidental injury or recovery from a surgery. The waiting period for short-term disability insurance is 14 days. 

• Long-Term Disability Insurance

  On the other hand, long-term disability insurance covers disabilities that are not recoverable. A few examples here are cancer, severe mental illnesses, and tissue damage. 
   

  Long-term disability insurance plans are also known as permanent disability insurance. These insurance plans cover catastrophic injuries and illnesses that can lead to job loss. 
   

  The policyholder can take benefits of such a disability insurance plan until their age of retirement. It covers medical conditions like mental illness, heart disease, etc. However, the tenure of such an insurance plan may depend on the insurer.

How Does Disability Insurance Function 

Standard disability insurance policies cover disability caused by an accident or disease. The disability can be temporary or permanent, and the insurance will pay you the sum assured in the manner mentioned in the policy document. However, the extent of coverage — whether it will cover total disability or temporary disability — will depend on the nature of the insurance. 
 

There is likely to be a waiting period for both short and long-term disability insurance. We recommend you get clear information from your insurance provider before purchasing a disability insurance plan.

Short-Term vs. Long-Term Disability Insurance:

Understanding the differences between short-term and long-term disability insurance is essential to purchasing the right type of insurance to protect yourself and your family from the uncertainties of life.
 

Should You Buy Disability Insurance?

Life is unpredictable. Anyone who ever was caught in an accident could never foresee it, and having a major accident can often cause temporary disability. In unfortunate cases, such disabilities can be long-term or permanent. The same can be a result of a disease. 
 

In such a horrendous scenario, people lose their ability to earn, and not having an income during a time when you need it the most can have a far-reaching effect on people’s family lives. Having short-term or long-term disability insurance can be a big help in such situations. 
 

Also, if you work under hazardous conditions or are often on the road, getting disability insurance may be a wise decision. If you plan to buy disability insurance early in life, you can enjoy a longer coverage for a lesser premium amount.

How to Buy Short-term or Long-term Disability Insurance?

Now that we have discussed the relevance of disability insurance, you would benefit to know that you may not require to buy an individual policy for disability insurance. Some term plans come with disability coverage, and they cover temporary or permanent disability. 
 

However, it depends on the insurance provider. If you buy a term plan that does not have disability coverage, you still can opt for a disability rider^# like Tata AIA Accidental Death and Dismemberment (Long Scale) (ADDL) Rider^#. This way, you can enjoy the benefits of disability insurance within the umbrella of your term plan itself.

To Conclude

Just like any other insurance, investing in disability insurance makes a lot of sense, given what it offers under dire situations. And if you wish to add disability coverage to your basic insurance plan, knowing the difference between short-term and long-term disability is essential. It will help you choose the right plan for your requirements.