Long term disability insurance is insurance that you buy in case you can’t work for a long period of time due to injury illness, or accident. If something happens that prevents you from working, and therefore getting paid, long term disability insurance can make sure that you still have money to live on.
Long term disability insurance can’t take the place of your normal income, but it can help offset your living costs. Your long term disability insurance payments will probably cover about 60% of your salary. So you won’t be rolling in dough, but you’ll get a lot more than nothing.
Why You Need It
You might assume that you don’t need to buy long term disability insurance. After all, worker’s compensation would cover most cases that would require that…right? Well, that might not be the case. Most long term disability cases are not accidents, they’re illnesses. If you get a chronic illness, or you have an accident that isn’t job-related, you’ll wish you had a long term disability insurance policy.
Most people believe that relatively few people become disabled, and it won’t happen to them. Information from the Social Security Administration says otherwise. According to the SSA, 25% of people who are 20 years old may become disabled before reach the age when they can retire. That’s one in four!
Long Term vs Short Term Disability
Long term disability insurance is different from short term disability insurance. Short term disability insurance policies usually last around 6 months, while long term policies cover a span of time that is much longer, at least 2 years and sometimes much longer. If you’re shopping around for long term disability insurance, you should try to hold out for a policy that will cover you from your accident or illness all the way until you reach the retirement age of 65.
How to Get It
You may purchase long term disability insurance through your employer, through the government, or on your own. A plan from your employer may not cover as much of your monthly income as one that you purchase on your own. For example, some employee-provided long term disability insurance plans only pay 30% of your salary, instead of the 60% you would get if you purchased it on your own. Some people choose to purchase their own long term disability insurance to supplement the insurance that they already receive from their job.
