Disability insurance provides replacement income for an employee who becomes disabled and cannot work. There are two types of disability insurance:

• Short-Term Disability: This insurance is used when the employee cannot perform the functions or duties of their job. It will pay out for up to 26 weeks. Benefits depend on the employee’s salary, and usually cover 60 to 80 percent of their normal salary.
• Long-Term Disability: This type of disability insurance kicks in after the maximum 26 weeks of Short-Term Disability. These benefits continue until the employee recovers from their disability, or until their normal date of retirement. This covers a similar percentage of their salary as short-term benefits. If they receive disability benefits through Social Security as well, the benefits don’t stack. The Social Security benefits will be subtracted from the employer-paid benefits.