Key fact: The most common reasons for short term disability insurance claims are pregnancies, musculoskeletal disorders, injuries, digestive disorders, and mental health issues.¹

What is short term disability insurance?

Disability insurance pays you benefits to replace a portion of the income you lose if you’re unable to work due to a prolonged illness or injury. Short term disability insurance typically starts paying benefits within one to two weeks of a qualifying illness or injury and covers you for a benefit period that’s usually between 13-26 weeks. You’ll continue to receive benefits until you’re able to return to work or until you reach the end of your benefit period.

How does short term disability insurance work?

If you become too sick or injured to come to work, and you have a short term disability policy in place, you’ll submit a claim along with information about your condition from your doctor. If your claim is approved, you’ll receive benefits until the end of the benefit period outlined in your policy. The money is paid to you directly, and there are no limitations on how it can be spent.

Why do you need short term disability insurance?

Job loss and medical problems are two of the most common reasons individuals file for bankruptcy.2 If you lost your income because you were injured or became too sick to work, would you be able to cover your living expenses, plus additional medical bills? For many people, the answer is no. Short term disability helps cover the expenses that come with taking six months or less off work to care for your health.

What conditions qualify for short term disability?

Pregnancy, mental health issues, injuries, and musculoskeletal issues are among the top reasons for disability claims. Coverage varies by policy, but your plan should outline if there are any conditions that would be exempt from coverage under your policy. Unlike Worker’s Compensation, short term disability insurance pays benefits for an injury or illness unrelated to your job.

What’s the difference between short term and long term disability insurance?

As the name indicates, short term disability insurance is intended to cover you for a short period of time following an illness or injury that keeps you out of work and is usually offered through an employer. While policies vary, short term disability insurance typically covers you for a term somewhere between 13-26 weeks and can replace anywhere from 40-70% of your income during that benefit period. If you have both short term and long term disability policies in place, short term disability will pay you benefits during the waiting period before your long term disability coverage begins, at which point you’ll transition from one policy to the next to receive benefits. For that reason, it makes sense to have both policies to help ensure an unexpected illness or injury won’t derail your financial confidence for a few months or for several years. 

What’s the difference between short term disability and temporary disability insurance?

Temporary disability insurance is offered to workers through a government program in some states. This insurance is meant to compliment worker’s compensation benefits by covering disabling illnesses or injuries that don’t happen at work or result from working conditions. Unlike short term disability insurance, it is only available in a handful of states. If you live in a state that offers temporary disability insurance, look into how much the benefit would pay to you compared to your expenses. If you determine that you would need more coverage, you may consider applying for a short term disability insurance to help make up for the gap in pay. If you don’t live in a state that offers temporary disability insurance, it will be that much more important to ensure you’re protected by a disability policy through your employer or purchased individually.

What should you know when buying short term disability insurance?

Before you start shopping for short term disability insurance, check with your employer to see if a policy is available at work, and look into the disability benefits offered in your state, so you know whether to factor something like temporary disability insurance into your overall plan. When comparing policies, you should know how much income you’ll need to replace if you’re unable to work and how long you’ll need to receive benefits. If you have a long term disability policy in place, you’ll want to make sure that your short term benefits don’t run out before your long term benefits begin, so plan to have a short term policy that will cover you during the waiting period, or “elimination period,” in your long term policy.

Is short term disability insurance worth it?

Whether a short term disability policy is right for you is a decision only you can make. But considering that over 1 in 4 of today’s 20-year-olds will become disabled before they retire,3 having a short term disability policy in place can help you feel confident that you’re protected, whatever challenges life may bring. If you’re not sure how a short term disability policy will fit into your overall financial plan, talk with a financial professional who can help you figure out how to best protect yourself.

How do I get individual disability insurance?

Check with your employer, who may offer disability insurance coverage. If you’re self-employed, your employer doesn’t offer disability insurance, or you want to supplement the policy your employers do offer, you can apply for an individual disability policy. Individual disability insurance elimination and benefit periods may differ from group disability insurance plans, but a financial professional can help you choose the right coverage for your situation. If you’d like some help understanding what type of coverage makes sense for you and applying for a policy, get in touch with a financial professional who can help you make a decision.

Employers: Learn more about offering short term disability insurance to your employees
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