What happens when you get injured or sick on the job and can’t perform your job duties like you used to? While many individuals may become disabled as a result of work-related activites, roughly 75% will become disabled off-site.
Disability insurance is a type of coverage that provides income protection when you lose time at work due to an illness or injury. With this coverage, a disabled individual receives partial income replacement to supplement lost wages.
There are two types of disability insurance: Short-Term Disability (STD) and Long-Term Disability (LTD).
What is Short-Term Disability Insurance (STD)?
STD coverage typically kicks in between 1 and 15 days of the start of your disability. With STD, you can continue to receive pay at a certain amount, usually a fixed percentage of your income.
STD usually lasts between 10 to 26 weeks, varying by policy. Long-term disability (LTD) will often take effect after STD is exhausted.
Why is STD So Important?
STD is important for those illnesses or injuries that keep you out of work for more than a couple days. After you have exhausted your sick leave, STD payments can kick in to keep you receiving compensation while you heal or recover. It’s important to note, however, that these payments can often be reduced to 60% or less of your salary after a few weeks.
STD is more common than you may think! Almost one third of workers will lose more than a month of pay because of an illness or injury. Add on medical expenses, and suddenly that lost pay becomes a serious burden.
What is Long-Term Disability Insurance (LTD)?
LTD coverage compensates employees at a set percentage of their regular pay after the determined waiting period. For example, once an employee has exhausted their STD insurance after 3 to 6 months, LTD would kick in.
LTD insurance covers workers if they become disabled for a prolonged period before retirement. Usually, an LTD insurance policy is offered as part of a benefits package. LTD policies vary in their scope from 2 to 10 years to continual pay outs until the age 65.
Why is LTD So Important?
In the event that an illness or injury leads to a long-term inability to work, STD benefits may not be enough to sustain you or your family after a certain point. LTD benefits can help keep you and your family afloat when disability hits to insulate you from the burdens of a debt default, home foreclosure, or worse.
An LTD policy is recommended for any worker who relies on their income for stability. While those with deep savings and investments may be able to survive without STD coverage, an LTD policy is still the best way to protect you and your family from an unpredicted, sustained disability.
Are you interested in STD or LTD benefits for your employees? ERM Insurance Brokers can help!
Call our office in Irvine, California at (949) 222-0444 to speak with a member of our team!