Often described as insurance that goes to work when the insured can’t, this policy pays an income for a specified benefit period when the insured becomes disabled.
The benefits may be paid for a total of 13 weeks or as long as two years with short term disability plans. Long term disability coverage can cover up to age 65 or for life, depending on the specific plan. The benefits paid through disability insurance are usually income tax-free when the employee pays the entire premium. These policies may also be issued on a “non-occupational” basis at lower premiums to avoid duplication with worker’s compensation. Coverage is normally for employees only.