What type of disability income insurance is best; insurance covering short-term disabilities only or policies that cover long-term disabilities?
Assuming that only one of these types of disability insurance products will be purchased, sound risk management principles would suggest the purchase of long-term disability (LTD) insurance. LTD insurance protects the insured against disabilities that may last many years, or even a lifetime, and thus provides protection against large losses of potentially catastrophic magnitude. Although long-term disabilities occur less frequently than disabilities of a relatively short duration (e.g., several weeks or even a few months), the loss of income for a short duration can be more easily absorbed by the family unit than can an income loss that lasts for several years or longer.
Assuming that only one of these types of disability income insurance products will be purchased, sound risk management principles would suggest the purchase of long-term disability (LTD) insurance. LTD insurance protects the insured against disabilities that may last many years, or even a lifetime, and thus provides protection against large losses of potentially catastrophic magnitude. Although long-term disabilities occur less frequently than disabilities of a relatively short duration (e.g., several weeks or even a few months), the loss of income for a short duration can be more easily absorbed by the family unit than can an income loss that lasts for several years or longer.
