What Does Disability Insurance Cover?

When an employee can no longer work due to an illness or injury, disability benefits may deliver valuable financial assistance. In addition to offering partial income replacement, disability insurance may help provide coverage for numerous medical and rehabilitation costs during recovery. Some policies offer coverage for retraining if the covered person’s injuries prevent them from returning to their previous job, but they could potentially move to a different position.  

While long-term disability insurance coverage is not required by law, many employers choose to include it as part of their benefits package. Other components may also include health insurance, retirement savings plans, workers’ compensation insurance, life insurance and more.  

Disability insurance may cover numerous injuries and illnesses if the covered person cannot perform their regular work duties for an extended period. Depending on the insurer, a policy may provide coverage for temporary and permanent disabilities, mental illness and pregnancy-related complications.   

How Does Disability Insurance Work? 

After the insurer approves a disability claim, the policyholder can use the income replacement for any reason, including medical bills and everyday expenses.  

Disability insurance coverage helps pay a portion of the covered employee’s income. Benefits are only paid if the insured person becomes disabled while the policy is in force. There are two main types of disability coverage: 

• Short-term disability (STD) may help replace income for a limited time, such as three to six months. This coverage typically has a 10-day waiting period.

• Long-term disability (LTD) may help provide income replacement for a longer period, usually stated in years, depending on the policy’s terms. This coverage typically has a waiting period of three to six months.