Accident Insurance vs. Disability Insurance: What’s the Difference and Which One Should You Choose?
As the saying goes, accidents will happen. In fact, 2.7 million U.S. employees had accidental injuries and illnesses at work last year. The result? A lot of people missing work.
Perhaps the worst part: Having health insurance might not be enough to cover you if you get seriously injured or sick.
“You don’t want to just buy health insurance, only because all that’s going to do is pay a doctor or a hospital or a pharmacy. He’s a licensed insurance agent and executive sales leader with HealthMarkets based in Oklahoma City.
Interested in accident or disability insurance—or both? Contact a HealthMarkets licensed insurance agent at (800) 827-9990. Visit healthmarkets.com to get started.
So what’s the difference between accident and disability insurance—and which one should you choose? Here are some answers.
Accident insurance can help cover you for many types of injuries
“Each policy’s going to be a little different,” says Casey. “Some focus more on minor injuries, like just going to the ER or urgent care, whereas others will focus on what happens if you wind up in a coma from a car wreck and you’re in the hospital for 20 days.”
Accident insurance pays you a lump sum
After you’ve had an accident, the insurance company will send you a single payment such as a check or bank deposit to cover any out-of-pocket expenses you might have because of your injury.
That money could help cover emergency treatments, hospital stays, medical exams, or transportation services. It could even be used to help pay for your living expenses.
Claims are generally paid within a few weeks after your doctor verifies, through your medical records, whether your policy should pay.
Disability insurance helps you almost immediately after an accident or illness
Think of disability insurance as a safety net in the event you can’t work after you’ve had a qualified accident, injury, or illness.
Say you have a motorcycle accident, get hurt, and can’t work for the next two months. “During that time, disability will help with lost wages by paying, generally, a percentage of your income,” . She’s an HR knowledge adviser for the Society of Human Resource Management based in Alexandria, Virginia.
But you can’t get that money until your doctor fills out a form and sends it to your insurance company, proving that you can’t work due to your injuries or illness.
“You have to be deemed disabled and approved for it,” says Casey.
Accident or disability insurance could help you if you get hurt and can’t work. Find out more by contacting a HealthMarkets licensed insurance agent at (800) 827-9990. Visit healthmarkets.com to set up a call.
Disability insurance pays you a regular “salary” when you’re hurt
Your disability pay comes either weekly or monthly and covers the time you’re away from work. As Casey puts it, “You’re missing six months of work, so here’s six months of salary.”
You can get disability insurance in two forms, short term and long term
About 40% of American workers have short-term disability insurance, while just 35% have long-term plans.2 Short-term disability policies replace a portion of your salary for 6 to 12 months.3
About 22% of short-term disability claims are filed because of pregnancy and childbirth, while other reasons include mental illness (such as depression), hernias, back ailments, or sprains.4
Long-term disability coverage, on the other hand, usually starts after that 6-to-12-month mark.5
“Long-term [disability insurance] is expected to be something a bit more involved, more serious,” explains Pringle. “Think of someone having an injury that results in some ongoing impairment.”
Some reasons that people file long-term claims include heart attacks, strokes, cancer, and disorders that affect the spine, back, or knees.6
And depending on your policy, long-term disability benefits could last for years.
So which insurance plan—accident or disability—should you choose?
“I’d say all employees could possibly benefit [from either type of plan],” says Pringle. “No one wants to expect that there would be a period they’d be under medical care and unable to work. But should that happen, knowing that there’s a safety net can help.”
Here are additional tips to keep in mind when comparing accident and disability plans:
- How much you have in savings. “The first question is, ‘How long am I going to be able to go if my income were to stop tomorrow due to an injury or illness?’” says Casey. The majority of Americans can’t comfortably cover 3 months of expenses.7
- How high is your health insurance deductible?
- Don’t rely on Social Security or workers’ compensation. These two government programs can help make up for lost income, but they may not be enough. Workers’ compensation applies only to injuries or illnesses you sustain on the job. And the average Social Security disability payment was about $1,200 a month for disabled workers in November 2021.9
Interested in accident or disability insurance—or both? Contact a licensed insurance agent at (800) 827-9990, or visit healthmarkets.com to get started.