Accident insurance vs. Disability insurance: what you need to know

There are many types of insurance out there, and sometimes it is hard to keep them all straight. Two types of coverage that can come into play in the case of injury are accident insurance and disability insurance. Below are some key points to remember for each, how they are different, and how they can work together to protect you and your family.

What are accident insurance and disability insurance?

Accident insurance provides a lump-sum cash benefit to help offset costs associated with a covered injury. This type of policy can help with co-pays for treatments as well as with out-of-pocket expenses paid up front on High Deductible Health Plans (HDHPs). If a claim is approved, a check is sent for covered injuries such as fractures or dislocations, and for covered treatments of those injuries, such as emergency room fees or out-patient visits.

Disability insurance (short-term disability and long-term disability) replaces a portion of your income if you are too sick or too hurt to work due to a covered illness or injury. The length of time you may receive short term disability benefits is usually 13 or 26 weeks. Depending on the severity of your injury or illness, your claim may transition into long term disability (if you have this coverage). If your disability policy is available through your accident insurance, it means your policy covers disability that occurs specifically due to a covered accident, not sickness.

How these plans work together

 These two types of plans are typically independent of one another, meaning you can receive benefits from each and neither amount will be affected. You should, however, check with your benefits administrator to confirm this.

For example, if you fall and break your arm, accident insurance could provide a one-time cash payment to help with co-pays you might incur for treatment. If the broken arm meant that you could not work, you could then file a claim for short-term disability benefits in order to begin receiving weekly replacement income. Although there is a distinct difference between the two types of coverage, they can certainly complement each other in the case of a covered injury.

Hopefully this helps with explaining at least two different but complementary types of insurance. Be sure to ask your benefits administrator if either of these policies is available to you as part of your employer’s benefits package.  

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SLPC 25101 08/13 (exp. 08/15)

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