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What's the difference between short-term and long-term disability insurance?

Disability Insurance
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Short-term disability insurance covers a percentage of your lost salary should injury or illness knock you out of work for more than a few days. (It bears repeating the old adage here: Do NOT run with scissors.) Payments generally kick in when you have exhausted any available sick leave. You might see a large chunk of your salary early on, but payments are often reduced to 60% of your salary, or less, after a few weeks. Duration of benefits varies by policy, but six months is typical.

Long-term disability insurance is a more typical insurance product in that it protects you from catastrophic illness or injury, including tragic twists of fate that permanently end your ability to earn a paycheck. (A wood chipper is NOT a toy, Fool.) These policies usually pick up where short-term disability policies leave off. Some last only five or 10 years, but you want one that covers you until age 65.

Let's focus on short-term disability right now, since long-term issues will dominate the remaining questions. When it comes to missing work for six months or less, most people have a number of sources for help:

  1. Paid leave: If your job provides sick leave and emergency leave, chances are you already know how many days you get and whether these carry over from year to year if you don't use them.
  2. Workers' compensation: Most employers are required to provide workers' compensation benefits that replace a portion of your income if you are unable to work, temporarily, due to an accident that occurs in the workplace or while on company time doing company work. These benefits vary dramatically by state.
  3. Automobile insurance: If you are injured in a car accident, your auto insurance may inclu