The Real Reasons Short- and Long-term Disability Coverage Matters for You

Natalie Burg

Disability happens. Just ask Hank*, a 58-year-old mental health supervisor who was injured in a fall. After pulling over to to check his tire, Hank fell, and hit his head: He ended up with a cervical cord injury that resulted in paralysis to both hands and legs.

That day, life changed dramatically for Hank and his wife. But thanks to his Long-term Disability insurance, they didn’t have to choose between paying their bills and focusing on Hank’s health and adapting to their new life.

They had the income they needed to get by from their insurance—plus assistance from their insurer in connecting to Social Security Disability and additional military benefits.

With 5.6% of working Americans likely to experience a Short-term Disability in an average every year, Disability insurance—both short-term and long-term—is a critical component to keeping people healthy, financially sound, and as productive as possible.

Disability in the United States

The need for some sort of income assistance when dealing with a disability is more common in the United States than you might think. According to the Council for Disability Awareness:

  • One in four Americans live with some form of disability
  • More than one in four 20-year-olds can expect a disability to make them unable to work for a year or more before they retire.

That’s why Supplemental insurance like Short-term and Long-term Disability insurance are such valuable benefits. Each provides you with a portion of your income while you’re out of work with a disability. This can vary from anything from permanent paralysis—a case for long-term disability coverage—or acute anxiety, for which short-term disability could be invaluable.

While the Family Medical Leave Act and Americans with Disabilities Act may provide you with certain job protections during periods of disability, it’s the financial security that makes Short-term and Long-term Disability insurance so critical.

“Depending on the severity of the disability, as well as the duration, that could be financially devastating,” says Liz Supinski, the Society for Human Resource Management’s director of research projects and insights. “If the disability prevented you from working long-term, it could permanently impact your earning potential.”

Is Disability insurance available somewhere other than your employer?

It can be done, but not typically recommended. This would be called an individual policy and it may cost significantly more than your employer-provided Disability offering. It’s important to check the state you live in; some states allow individual policies to be sold through an insurance agent or insurance company while other states require employers to offer at least Short-term Disability insurance.

Long-term Disability Insurance in Practice

Sudden injuries like Hank’s are just one of the many ways disability can affect someone’s ability to work. Steve* was a 67-year-old marketing manager when he received a terminal cancer diagnosis.

The road ahead was going to be tough, but it would also be long. There would be months and months of difficult, work-prohibitive treatment, during which his family’s bills would continue to come due.

Thankfully, Steve had Long-term Disability insurance through his employer-provided plan. He could focus on his treatments, spending time with his wife, and making the most of each day while still covering his expenses.

Long-term Disability insurance covers an average of 60% of lost income after a three- to six-month waiting period, and with a median maximum payout of $8,000 per month.

While Social Security does provide coverage for permanent disabilities—Hank, for example, qualified—there’s still a gap for those whose recovery may exceed the limits of short-term coverage, but will eventually be able to return to work.

It’s easy to see how quickly a long-term disability could become a financial catastrophe for many families. According to the CDC, 61 million Americans live with a disability—including injuries like Hank’s, serious physical illnesses like Steve’s, chronic mental illness, and more.

“If you’re unable to work, your income could just stop,” says Supinski. “You would need to pay your usual expenses, as well as any other out-of-pocket expenses you may have due to the disability, out of whatever emergency fund, savings, or other finances you may have.”

Short-term Disability Insurance in Practice

Being out of work due to disability for a limited period of time can be financially disastrous for many people. Even a minor injury—like a house painter with a broken wrist—can put people in a tight spot.

After all, if your bills are going to collections after two months of being out of work, you might think twice about resting for your doctor’s full recommended recovery period—putting yourself at risk of re-injury.

Having Short-term Disability insurance relieves people of making a choice between their health and their financial security. Short-term Disability insurance covers a fixed percentage of lost income for a set period of time, typically 60% of income for around six months.

When you’re able to pay your bills while recovering, following the doctor’s orders becomes an easy decision. It allows you to heal with less stress, which is a mental and physical benefit during an already trying time. When your ability to get back to work depends on getting better, being able to take the time you need to fully recover is a big benefit.

The Security of Disability Insurance

Many Americans are thankful for their Disability insurance—something they never hope to use but can help them stay afloat financially while getting healthy again. Having Disability insurance as a safeguard can be important for your financial and physical wellbeing.

When Hank’s accident happened, the only thing on his and his wife’s minds was his physical health and hospital stay. They weren’t focused on processing claims and their future financial wellbeing. But because they had Long-term Disability insurance, they didn’t have to. Their claims team worked quickly with the hospital to gather the necessary information and approve the claim so they could replace Hank’s income before they even missed it.

The team went a few steps further, too, investigating Social Security Disability and a possible increase in Hank’s military benefits in light of his injury.

Thanks to his Long-term Disability insurance, Hank and his wife knew they could enter their new life with as much financial security as possible.

For the millions of people who find themselves out of work every year because of a disability, that’s welcome reassurance. The key is getting this important benefit in place long before you need it. That way, when the need for Disability insurance coverage arises, the only thing you have to focus on is your health.

Disability Insurance Calculator

Disability Insurance is an important resource, but it can be confusing to determine how much coverage you may need. This calculator can help you assess and determine your needs in 3 simple steps. 

*Names changed to protect the privacy of individuals.

This informational material shall not be considered financial advice. The Hartford assumes no responsibility for any financial, investment, or tax-related decisions. Those seeking resolution of specific financial, legal, tax, or business issues, questions, or concerns regarding this topic should consult their own financial, investment, tax, legal, or other business consultants, advisors, or other professionals.

2 Responses to "The Real Reasons Short- and Long-term Disability Coverage Matters for You"
    • protective face masks | November 27, 2020 at 8:16 am

      This is more practical info than I can find anywhere else.

      • Laura Benware | November 30, 2020 at 1:46 pm

        We are so glad you enjoyed the information. Thanks for stopping by LifeLime. Come back every month for new helpful articles.

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