This article originally appeared on the American Fidelity Blog

Understanding the differences between short- and long-term disability insurance can be tough and knowing which coverage is right for you is not always easy. However, disability insurance can be an essential part of a solid financial plan, so it’s important to understand your options.

What is disability insurance?

Disability insurance is designed to help protect you and your family financially if you become unable to work due to a covered injury or illness. When you use disability insurance, you receive a portion of your gross monthly earnings. This could help you focus on your recovery and worry less about bills or other expenses that may be difficult to pay without financial support.

Understand the importance of disability insurance

What is the difference between short- and long-term disability?

The main differences between short- and long-term disability insurance are the amount of time until the benefits begin and how long the coverage lasts. Both insurance plans are designed to help provide income protection while you are disabled. Let’s look at how each plan can benefit you, depending on your situation!

Short-Term Disability Insurance

Short-term disability insurance is designed to help protect your paycheck for a shorter period. Depending on your covered disability, this plan may provide benefits to help you for a few weeks or a few months, usually no longer than one year. The coverage may not be long-term, but the elimination period is usually only 7 to 14 days.  For example, suppose your elimination period is 14 days. In that case there will only be 14 days from the date you first suffer a covered disability and the date you begin to receive benefits.

Here are some common reasons you may use short-term disability insurance:

• • • • • • • Injury from a major accident
            • Disability associated with the delivery of a child
            • Upcoming surgery and recovery time
            • Experiencing bad side effects from medicine or medical procedures

Long-Term Disability Insurance

Like it sounds, long-term disability insurance can help protect your paycheck for an extended period. If you are looking at a longer recovery or a more serious condition, this is where long-term disability insurance is useful. Depending on your specific plan you may receive benefits if you remain disabled for up to two years, five years, ten years, or even to social security retirement age.

Here are some common reasons you may use long-term disability insurance:

• • • • • • • Heart disease, cancer, diabetes or stroke
            • Mental illnesses
            • Muscle, back or other joint pains
            • Arthritis

What To Consider

How long can you go without a paycheck? How many sick days does your employer provide?  These are two fundamental questions to ask yourself when deciding between short- vs. long-term disability insurance and choosing an elimination period. Suppose you cannot go over a month without a paycheck and only have ten sick days. In that case, we suggest you consider enrolling in both, so you are prepared for the unexpected and have options to help you have financial protection. On the other hand, if you can go months or even a year without a paycheck, then long-term disability insurance with a longer elimination period may be enough for you. Talk to your American Fidelity account manager to discuss the best options for you!