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Short-term and long-term disability insurance differences

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When you're considering which type of disability policy to purchase, you should first know the difference between short-term and long-term policies.

Short-term policies can provide you with benefits faster than most long-term policies can; however, the benefits will not generally be available for as long. Most short-term policies have a waiting period before you can get benefits. Some will even have two waiting periods. For example, there may be a short waiting period if you were injured in an accident. A longer waiting period may be in effect for an illness. The waiting period might be from zero to 14 days. Long-term policies usually have a waiting period of 90 days, but could be 30 to 720 days.

You can purchase disability policies from a regular insurance company or your employer could offer you a policy as part of a benefit package for employees. Long-term policies are generally more expensive than short-term policies because you will receive the benefits longer.

If both policies are not within your reach financially, then it's best to get a long-term policy. It's likely that a disability won't last a long time, but if it does, you could be eligible for workers' compensation, Social Security or other additional protection. You may be able to get through a short-term disability, even if you didn't have insurance. The long-term policy can keep you afloat financially for longer, sometimes even up to age 65.

Not having disability insurance can leave you and your family in a bad spot financially if an illness or accident occurs. While you hope that neither policy is ever needed, you can find peace of mind when you have it.

Source: AXA Equitable Financial Services, LLC, "Long-Term vs. Short-Term Disability Income Insurance," accessed March 07, 2016

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