Disability Insurance, or DI, is a type of health insurance that pays a monthly income to the policyholder when he or she is unable to work because of an illness.
Short-term disability (STD) plans provide insurance coverage and benefits for a couple of weeks or as long as two years.
Long-term disability (LTD) policies typically cover an individual for a couple of months but could be purchased to provide benefits for the rest of the insured’s life.
STD and LTD policies have waiting periods that insureds must satisfy before receiving benefit payments. Waiting periods for STD policies typically last a couple of weeks while LTD plan waiting periods may last a couple of months. In some instances, the waiting periods can be waived if the disability is evident, such as a broken arm. Disability policies may allow insureds to stop paying premiums if they are disabled for longer than 90 days (waiver of premiums) and increase coverage amounts at a later time (additional purchase benefit).