Disability insurance and paid leave aren't the same
When you have to take time off from work, paid leave and disability insurance can help relieve some of the financial pressures of lost income. However, these two benefits are not the same.
Key Differences
Paid leave and disability insurance have different coverages but a common purpose. Employers may offer disability insurance as well as paid leave. Both may help cover lost wages when you have to take time off work. Paid leave availability depends on the reasons covered by the paid leave program and covers any designated purpose. In contrast, disability insurance is specifically for a covered illness or injury to the policyholder.
Paid Leave
Paid leave pays a portion of your salary if you can’t work for personal or family reasons covered by the paid leave program. Paid Family and Medical Leave (PFML) programs typically cover taking time off to go to the doctor or care for a sick family member. PFML benefit periods will vary by location and depend on various factors within each federal, state or local program.
Why paid leave is important:
- Financial Security: Paid leave allows you to take time off for covered purposes while still receiving a paycheck. This provides financial security as you can continue to meet your financial obligations while taking time away from work.
- Family Support: Depending on the program details, paid leave can provide much-needed support for you when a family member is ill or dealing with a death. This can be especially important for single-parent households or those with elderly or disabled family members.
- Increased Productivity and Satisfaction: If you take time off, you may feel more productive when you return to work. This is likely because you can rest and recharge. In addition, paid leave may result in increased loyalty and feeling valued as an employee.
Disability Insurance
Disability Insurance helps replace a portion of your paycheck if you can’t work due to a covered injury or illness. The money may be deposited directly into your bank account or sent to you by check. This allows you to pay toward your living expenses and make other purchases as you see fit.
Why disability insurance is important:
- Customization: You can customize your policy to fit your needs, such as when you’d like benefits to begin, the length of time for which you are covered and the amount of your monthly benefit.
- Security: Disability insurance may help provide peace of mind that you will have a financial safety net in the event of a covered injury or illness.
- Continuity: Disability insurance may help you maintain your lifestyle, even when you cannot continue working. This can provide a sense of stability and continuity during a difficult time.
Learn more about disability insurance
The importance of both
If you have disability insurance, paid leave may help cover your income during the elimination period. For those who have paid leave, it may help to keep disability coverage in place in case your leave runs out before you’re able to return to work. Pairing disability insurance and paid leave may give you peace of mind while caring for yourself or others.
This blog is up to date as of March 2023 and has not been updated for changes in the law, administration or current events.