No one thinks it will happen to them, but 1 in 4 20-year-olds will become disabled before they reach retirement age.1 Knowing the risk of becoming disabled and losing income while unable to work is one thing, but studies show that employees are also poorly informed about the benefits that could help cover their expenses if they’re one of the 25% of employees who become disabled.
Disability insurance can help, and it’s one of the most popular benefits out there—98% of eligible employees participate in a short-term disability plan.2 But it’s not the only type of coverage that can help people who become disabled. It’s great that people have options, but those options can lead to confusion: A recent survey found that 35% of employees do not fully understand any of the employee benefits they enrolled in during their most recent open enrollment period.3
We’ve broken down the differences between four commonly confused types of coverage: short-term disability, long-term disability, critical illness and long-term care. Share this resource during your client conversations and as a leave-behind for their reference.
What’s the difference between coverage for short-term disability, long-term disability, critical illness and long-term care?
Short-term disability insurance
Short-term disability insurance pays benefits directly to the insured (unless otherwise assigned) if they are disabled because of an injury or serious illness and unable to work. Short-term disability insurance can cover needs that result from a disabling incident in which the planholder is able to return to work in a relatively short period. For conditions that last longer than a few months, short-term disability coverage can also help fill the waiting period before long-term disability benefits are paid, adding crucial financial protection after a serious health event.
Long-term disability insurance
Long-term disability insurance offers similar benefits but is usually defined as longer than a few months, and can pay out benefits for a number of years after a disabling incident, as stipulated in the plan. For this reason, many people choose both short-term and long-term disability to make sure they are protected whether they recover quickly or require extended support. Long-term disability benefits can help cover medical copays and deductibles, and can help replace lost income while the insured is unable to work. Most long-term disability plans include a waiting period, usually three to six months, before benefits are paid.
Critical illness insurance
While disability insurance pays benefits to insureds unable to work because of serious illnesses or injuries, critical illness insurance pays benefits when an insured is diagnosed with a covered critical illness such as a heart attack, stroke or cancer. These diagnoses often require extensive treatment and can result in especially high medical bills. The lump sum benefits paid on a critical illness plan can be used to help cover unexpected costs related to a critical illness, including medical bills, or even everyday expenses such as groceries. Like disability insurance, critical illness insurance pays benefits directly to the insured unless otherwise assigned.
Long-term care insurance
A severe illness or injury that leaves an employee unable to work might also require long-term care, such as physical therapy, rehabilitation, in-home care or moving into an assisted living facility—all of which come at a cost. Long-term care insurance helps to cover the expenses associated with that care. Many seniors require some form of long-term care as they age, and long-term care insurance can help relieve the financial burden on themselves and their family members when that time comes.
Because long-term care plans can be expensive or difficult to obtain, some insurers may offer optional riders on life insurance plans, such as accelerated death benefits and benefits restoration. These riders advance insureds a portion of the death benefit upon diagnosis of a terminal illness and can restore the death benefit when the insured passes away. While different than long-term care insurance, these creative life insurance options are typically more accessible at the worksite and can provide more affordable coverage and financial peace of mind for when an insured is faced with decisions regarding end-of-life care.
1 Social Security Administration. “The Faces and Facts of Disability: Facts.” Accessed 3.24.2021.
2 U.S. Bureau of Labor Statistics. “Employee Benefits in the United States News Release.” Published 9.24.2020. Accessed 4.20.2021.
3 Voya. “Voya Survey Finds One-Third of American Workers Don’t Understand the Benefits They Selected During Open Enrollment.” Published 1.29.2021. Accessed 2.4.2021.
The content within is for informational purposes for agent and broker-facing audiences. This information is not approved to distribute to prospective insureds, to prospective accounts, or to use as a solicitation. Misrepresenting this, or any, information to solicit or induce an insured to lapse, forfeit, or surrender an insurance policy is prohibited by law. Any use not specifically permitted herein is strictly prohibited.
Individual Supplemental Insurance Coverage
Coverage is underwritten by Aflac. In New York, coverage is underwritten by Aflac New York. Aflac WWHQ | 1932 Wynnton Road | Columbus, GA 31999 Coverage may not be available in all states. Benefits may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies/riders have limitations and exclusions that may affect benefits payable. For complete details, including availability and costs, please contact your local Aflac representative.
Group Supplemental Insurance Coverage
Continental American Insurance Company (CAIC), a proud member of the Aflac family of insurers, is a wholly-owned subsidiary of Aflac Incorporated and underwrites group coverage. CAIC is not licensed to solicit business in New York, Guam, Puerto Rico, or the Virgin Islands. For groups sitused in California, group coverage is underwritten by Continental American Life Insurance Company. For groups sitused in New York, coverage is underwritten by Aflac of New York.
Continental American Insurance Company • Columbia, South Carolina • 1-800-433-3036 toll-free • 1-866-849-2970 fax This is a brief product overview only. The plan(s) has limitations and exclusions that may affect benefits payable. Refer to the plan(s) for complete details, limitations, and exclusions.
Life and Disability Insurance: Group Short-Term Disability Income Insurance and Group Long-Term Disability Insurance
Coverage is underwritten by Zurich American Life Insurance Company of New York and Zurich American Life Insurance Company.
In New York, the terms and conditions for the Group Short Term Disability Income Insurance and/or Group Long Term Disability Insurance are set forth in policy form number 1000-ZAGP-DS-NY-01. The policies are issued by Zurich American Life Insurance Company of New York, a New York domestic life insurance company, located at its registered home address of 150 Greenwich Street, Four World Trade Center, 54th Floor, New York, NY 10007-2366.
In all states other than New York, the terms and conditions for the Group Short Term Insurance are set forth in policy form number 1000-ZAGP-01-01 or applicable state variation. The policies are issued by Zurich American Life Insurance Company, an Illinois domestic life insurance company, located at its registered home address of 1299 Zurich Way, Schaumburg, IL 60196.
The policies are subject to the laws of the state where they are issued. This material is a summary of the product features only. Please read the policy carefully for details. Certain coverages may not be available in all states and policy provisions may vary by state. On March 19, 2020, Aflac, Inc. announced the agreement to acquire Zurich North America’s U.S. group benefits business (ZEB), which consists of group life, group disability, and absence management products. Aflac Columbus and Aflac NY (Aflac) will reinsure, on an indemnity basis, Zurich’s U.S. in-force group life and disability policies. As of November 2, 2020, and subject to customary closing conditions, Aflac will assume the administration of the aforementioned re-insured Zurich Employee Benefits policies and services.
Zurich American Life Insurance Company | Administrative Office: 7045 College Boulevard, Overland Park, Kansas 66211-1523