Disability Insurance: What you need to know

Disability insurance is a type of insurance that allows individuals to protect themselves financially in case they become unable to work because of sickness, injury, or other disability. There are two main types of disability insurance: (1) short-term disability insurance; and (2) long-term disability insurance. Employers may choose to offer one or the other, or both. Disability insurance is a benefit that many employees consider valuable, and employers can provide it at little or no cost.
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Short-term disability insurance. Short-term disability insurance programs usually run from 30 to 90 days, but some may continue for longer. Benefits vary under short-term programs and usually range from about 60 percent to 70 percent of an employee's predisability income, subject to a weekly maximum. Additionally, there may be a waiting period before employees are eligible to receive short-term benefits.
Long-term disability insurance. Long-term disability insurance programs generally take over after short-term benefits have been exhausted. Benefits usually cover a percentage of an employee's pay (e.g., 60 percent of an employee’s predisability income) and may be subject to a monthly maximum. Long-term disability benefits are typically reduced by the amount of Social Security disability benefits and/or workers’ compensation benefits that the employee may receive.
Other types of plans. Employers may also provide wage and salary continuation plans or integrated disability programs.
Disability insurance plans have a number of common characteristics and design variations that employers need to consider when establishing a program. Plan design will affect the cost of the coverage, ...

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