Short-term Disability Insurance Basics

Should, you become disabled and can’t work for six months or a year, would you have enough savings, annual leave, and sick leave to cover all your living expenses during that time? If you do not, then it might be time to think about buying short-term disability insurance.

The facts are more than one in four people in their 20s will likely become disabled before retiring, according to the Council for Disability Awareness Also, one in eight workers can expect to be disabled for five years or more before retirement. This figure has been fairly steady for the past few years, according to Northwestern Mutual’s 2016 Planning & Progress Study.

Further, a 2015 study by the Pew Charitable Trusts found that only 55 percent of workers have enough savings to replace a month of loss income.

Almost 70 percent of Americans don’t have disability insurance, this figure also has been fairly steady for the past few years, according to Northwestern Mutual’s 2016 Planning & Progress Study. With statistics like that, it may be wise to consider buying short-term disability insurance to protect your financial future.

What is short-term disability insurance?

Short-term disability insurance pays a percentage, up to 66 percent, of your salary if you become disabled, meaning that you are not able to work for a short period of time due to sickness or injury. A typical short-term disability insurance policy provides you with up to 66 percent of your pre-disability base salary, according to various insurers who sell the policies and America’s Health Insurance Plans, a trade group.

The National Association of Insurance Commissioners estimates that these benefits generally last between six to twelve months. Most short-term disability insurance policies have a “cap,” meaning you receive a maximum benefit amount per month. Short-term disability insurance policies also have a limit on the amount of time you can receive benefits — up to one year, according to the Insurance Information Institute (III).

Short-term disability insurance, which is most often purchased as part of a group at work, and is paid by the employee. Group short-term disability insurance policies are “guaranteed issue,” meaning you do not have to take a medical exam to buy coverage. You can start receiving money from your short-term disability insurance policy after a waiting period, usually 14 or 30 days, after becoming sick or disabled, the III says The actual time for coverage to kick in depends on whether you suffer an illness or injury. If you suffer an injury, your benefits will be paid immediately. If you suffer an illness. Here are some examples: say you severely injure yourself by falling off a ladder at your house, then your benefits would kick in immediately. But if you suffer from a serious illness and can’t go to work, your insurance may not kick in until eight days after you became ill.

Causes of short-term disability insurance claims

Here are common reasons for short-term disability claims,:

  • Normal pregnancy
  • Injuries
  • Complications from pregnancy
  • Digestive disorders
  • Back disorders
  • Cancer