Short- vs. long-term disability insurance: How it works

November 17, 2022
By The Council for Disability Awareness Disability Insurance, Employee Benefits, Long Term Disability, Protect Your Income, Rock Enroll, Short Term Disability, Uncategorized

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 .. more »

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!

Beyond Your Benefits Package: Why Open Enrollment is a Great Time to Focus on Your Financial Wellness

November 1, 2022
By Alexandra Ginieres Disability Insurance, Employee Benefits, Insurance, Protect Your Income, Rock Enroll, Uncategorized

Alexandra Ginieres Head of Disability Marketing, Individual Markets Guardian Life Insurance Company of America® Editor’s Note: It’s that time of year when many employees are reviewing their employee benefits, renewing their previous choices or selecting new options, and considering financial products they can (or .. more »

Alexandra Ginieres

Head of Disability Marketing, Individual Markets
Guardian Life Insurance Company of America^®

Editor’s Note: It’s that time of year when many employees are reviewing their employee benefits, renewing their previous choices or selecting new options, and considering financial products they can (or did) buy on their own such as disability and life insurance.

The pandemic taught many Americans several things about financial wellness, including the importance of paid leave, retirement planning, and coverages such as disability and life insurance – whether it’s secured through your employer or you add coverage that stays with you as an individual no matter where you work.

If you’re like many Americans, your employer offers key benefits that provide valuable protection for you and your family. And you’re probably familiar with open enrollment season – that time each year when you may be able to choose your health insurance provider, explore tax-advantaged accounts like Health Savings Accounts and Flexible Spending Accounts, review and update retirement plan contributions, and elect employer-offered protection products, like disability and life insurance.

These “worksite benefits” are offered by your employer typically at a discounted group cost, with the option to further supplement those benefits with voluntary benefits (usually paid by you) that provide additional coverage for health and income. What many employees don’t realize, however, is that Open Enrollment season also offers them the perfect opportunity to look beyond their employer-sponsored benefits — to consider their entire protection strategy and financial picture.

Your financial wellness depends on a strong holistic plan that covers all aspects of your financial picture. While employer-provided benefits are a great start, it’s important to keep in mind that those benefit options are not ordinarily designed to protect all aspects of your financial well-being. Fortunately, you can also purchase individual products, such as disability insurance, life insurance and annuities, typically sold through a financial professional, that complement the benefits available through your workplace. Doing so can help to give you more complete financial protection and reduce the risks you or your loved ones could face without them.

Some risks to look out for

It’s important to concentrate on at least three risks to your financial well-being:

- - - - The risk of losing your income
        
        The risk of losing your life
        
        The risk of outliving your retirement savings

There are steps you can take to address each of these three risks. Doing so can help to protect both you and those you care the most about.

Protecting your income during your working years

If there is anything that we learned from the COVID-19 pandemic, it’s that anything can happen to anyone at any time and being prepared is key. Making smart choices about your benefits now can set you up for better protection in the future should something go wrong. While we can’t predict the unexpected, we can better prepare for it. Regardless of whether you are just beginning your career or are a seasoned professional, disability insurance is a necessary tool to help protect your income.

The ability to earn a living is one of the most important things in life. Income is essential to your livelihood and closely linked to your overall financial well-being. But when it comes to protecting your income, many working Americans may not realize the need to make it a priority.

According to The Guardian Life Insurance Company of America^® (Guardian), roughly 50 percent of people who leave work because of an illness or injury have trouble paying their bills.¹ Not surprisingly, workers who struggled financially during and after a leave from work had lower financial wellness scores and were more likely to report that the experience had a major or devastating effect on their household.

Even if your employer offers disability income insurance, there may be an income gap. One in 5 workers who made a disability insurance claim were surprised to learn that their employer-sponsored disability plans replaced only a portion of their salary, not 100 percent, based on Guardian’s research. Higher-income employees were also dismayed to learn that bonuses and/or commissions were not included in the calculation of their disability income benefit payments.

While no disability insurance plan will ever replace 100 percent of your income, purchasing individual disability income insurance from a financial professional will boost the amount of your money you will receive if you can’t work. If this is important to you, you’ll be able to “weather the storm” a little better if you become ill or are injured.

Protecting your loved ones if something should happen to you

If you have family or others who depend on you for financial support, purchasing life insurance from a life insurance professional is among the most important steps you can take for the financial wellness of your loved ones. Even if your employer provides you with this important coverage, it may not provide enough to financially protect those you care most about. And, in many instances, you will lose that coverage when you leave your employer. That’s why purchasing your own individual life insurance policy to supplement any workplace coverage you may have is a smart move, depending on the type of policy you buy.

Keep in mind the valuable protection role that life insurance plays: If something should happen to you, your policy’s death benefit will help ensure that your survivors can maintain their lifestyle, avoid financial hardship or bankruptcy, and continue to pay essential bills such as their rent or mortgage, health insurance, college tuition and car loans. Simply put, life insurance is one of easiest and most affordable ways to protect your loved ones should they lose your salary.

Protecting your income in retirement

The risk of outliving your retirement savings is a real one. While people who qualify for Social Security benefits in retirement can expect to receive a monthly benefit for the rest of their life, 80 percent of those participating in the 2019 Retirement Confidence Survey reported they would also rely on money from an employer-sponsored retirement savings plan, such as a 401(k), for income in retirement.²

One problem with that approach is these individuals risk running out of money in retirement, since the retirement income generated from a retirement savings account depends entirely on the individual’s account balance, the performance of the account’s investments and the withdrawal strategy used.

Eighty percent of survey respondents plan to work during retirement to supplement their income, yet only 28 percent are ultimately able to do this.

As with disability income and life insurance, there are steps you can take to help protect your income in retirement. In addition to contributing as much as possible to your employer-sponsored retirement savings plan, you may wish to consider purchasing other products from a financial professional, such as bonds and CDs, which can provide somewhat predictable returns, with possible tax advantages, and can help round out your investment portfolio.

Another option to consider is an annuity. By paying an insurance company a specified amount of money, you receive regular payments for a set amount of time, or for life. There are many different types of annuities that can provide you with cash flow right away (immediate annuities) or at some point in the future (deferred annuities).

Make the right moves for your financial future today

During open enrollment, it’s a good idea to consider your overall financial wellness, and address not only the benefits your employer provides, but protection products that can supplement those valuable benefits. Doing so will help you to address the risks to your financial well-being head-on. You have the power to make the decision to go with what you truly need based on your goals or concerns. Go through your options and be sure you can explain what you are buying. It all has to be clear and valuable for you.

If you need assistance in addressing any of these risks, a qualified financial professional can help you understand your options — and put you on the path to enhanced financial wellness.

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. This material contains the opinions of the author but not necessarily those of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA or provided by Guardian. BLICOA is a wholly owned stock subsidiary of and administrator for the Guardian Life Insurance Company of America (Guardian), New York, NY. Product provisions and availability may vary by state. Optional riders are available for an additional premium.

GUARDIAN® and the Guardian Logo® are registered trademarks of The Guardian Life Insurance Company of America.

2022-145121 (exp: 10/2024)

¹ Income Protection: The Role of Disability Insurance in Financial Wellness, The Guardian Life Insurance Company of America, New York, NY, May 2019 https://www.guardiananytime.com/gafd/wps/portal/fdhome/insights-perspectives/emerging-trends/income-protection

²2019 Retirement Confidence Survey Report conducted by the Employee Benefit Research Institute and Greenwald & Associates, April 23, 2019 https://www.ebri.org/docs/default-source/rcs/2019-rcs/2019-rcs-short-report.pdf

Ready for Open Enrollment? Three Steps To Getting In Shape for a Great Season

September 22, 2022
By The Council for Disability Awareness Disability Insurance, Employee Benefits, HR, Uncategorized, Workplace

For HR folks, the fall is sort of like their own version of the retail holiday season or the big football final…that’s because it’s open enrollment, the time when employees are able to make major changes to their benefits plans without penalties. And just like .. more »

And just like retailers start planning their holiday promotions early, so should the HR team begin planning how they will communicate both the existence of open enrollment and what it means to their team.

Here’s how to make the open enrollment period smooth for you and beneficial for your employees.

1. Finalize your options

Chances are good that you have already been working on determining what benefits you will be offering and the rate at which you will cover them. For example, maybe this is the year you add a wellness benefit or pet insurance. You also want to make sure you have a robust slate of health choices that might include dental, vision, and alternative medicine; as well as insurance, such as life and short-term and long-term disability.

With employment rates continuing to be high, benefits are just one additional way that you can strengthen your position in attracting and retaining employees.

2. Create your communications material

Even if you have the most admirable benefits plan in the world, it won’t help if your employees don’t know or understand what’s available to them—and one survey found that one-third of them do not!

From co-pays to premiums, the insurance world can be full of unfamiliar terms. Take health insurance—many employees can’t explain how a high-deductible plan might improve their financial situation. And many employees might never take the time to recognize what benefits are available to them. That’s why communication is vital during this time. Here are some pieces you should create:

A cheat sheet for common insurance terms: This would be an at-a-glance explanation of what all the terms mean, with examples of how they work in the real world. So, you could give a couple of explanations of how a high-deductible plan would play out for someone who uses little healthcare, compared to someone who has an ongoing health condition.

A summary of new insurance offerings: Finally offering massage therapy or financial wellness counseling? This is the time to tout the new benefits you’ll be offering to get employees excited about the package your workplace provides.

An explanation of existing offerings: During onboarding, most HR teams make a point to cover the benefit packages. But when employees are being bombarded with so much new information, they might not take the time to really dig in and find out what’s being offered and how they can take advantage of it. Open enrollment is the ideal time to refresh their memory on specifics. They might just end up with a renewed sense of satisfaction, just because you’re more thoroughly communicating what already exists.

A summary of total compensation (benefits + salary): Many employees don’t realize the value of their benefits package—estimated at 30% as most HR professionals know—but that disconnect means that they might feel underpaid if they don’t include these perks in their total compensation scenario. So depending on your bandwidth, it can be incredibly powerful to show exactly how much the company is kicking in, in terms of premium cost sharing, retirement program matches, disability insurance, and other programs you offer.

3. Use multiple communication vehicles

Gone are the days when HR could send out a big fat packet and hope/expect that everyone would read it. Today’s employees are used to getting their information in multiple ways. But the good news is that it doesn’t necessarily mean a ton more work for you; it just means thinking of creative ways to repackage the existing elements. The best way to make sure your communications vehicles hit their target market is through a strategy you can call COPE: Create once, publish everywhere. Some suggestions for broadcasting the materials you’ve created include:

Emails that drive them to your intranet, where materials reside online
A video campaign where you cover one type of benefit at a time and send the links to employees to watch at their leisure
A webinar where you present the information and they can send in real-time questions, with the option to replay later
A town hall style meeting where you can present and answer questions (done virtually if needed, depending on if you have a distributed workforce)
A drip campaign that supplements each of these by “teasing” what’s coming and meeting the need for “snackable” content that employees can consume quickly, then come back for more

As open enrollment season approaches, now is the time to prepare for your busy period. The great news is that it will wrap up just in time for you to enjoy the holidays.

Disability insurance

Disability insurance

Tag: open enrollment

Short- vs. long-term disability insurance: How it works