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What is The Difference Between Short and Long-Term Disability Insurance?

2011 April 28

The length of the benefit period usually defines the difference between the short-term and long-term disability policies. Short-term policies, which Dave does not recommend, usually provide benefits during the first week of disability, up to a certain dollar amount, for a period of 13-26 weeks. Long-term disability plans typically don’t begin paying benefits until after the elimination period (typically 90 or 180 days after sustaining the injury or illness which caused the disability) and pay out benefits for a longer term, such as for 5 years, or to age 65. Dave strongly recommends long-term disability since our greatest asset is our ability to work and earn an income. His advice is to establish an emergency fund equal to 3-6 months your expenses and use that as a protective measure instead of buying a short-term plan. By having your emergency fund, you eliminate the need to pay month after month for a measurable risk, which allows you to use those premiums to help pay down debt and grow your savings.