5 Things You Should Know about Short-Term Disability Insurance

Short term disability policies are the umbrella that will take care of the most immediately dire scenarios to enable you and your family to recoup and recover. According to a 2005 article in Smart Money, the American Council of Life Insurers reported that one third of Americans between the age of 35 and 65 would become disabled for more than ninety days. Because of the high risk involved, long term disability coverage is pricey. However, short term disability insurance may be a more practical option.

Figure Out What You Already Have

Your employer may already have you enrolled in a short term plan that covers injury, maternity/paternity leave and illness. It is usually presented as ‘sick leave’ and can sustain about sixty to eighty percent of your income for a few weeks or up to a year (depending on how long you have worked there). By finding out exactly what your employer covers will enable you to make a decision regarding whether to ‘piggy back’ that insurance or not get any at all if you feel you are sufficiently covered.

Get It Soon

The longer you wait to purchase short term disability insurance the more expensive it will be. Like most insurance your age, gender and health history will all be taken into account. If you are in good health and at a young age, you will present less of a risk and hopefully be able to invest in an affordable plan.

Eligibility

If you agree with and are eligible, a short term plan may work well. These are most of the requirements and expectations:

• You must be employed thirty or more hours per week.
• You must work a select amount of time before making a disability claim (usually a specified number of months or even years).
• Payment can be anywhere between fifty and seventy percent of your weekly salary (no plan covers 100% as they want you to go back to work).
• Short term usually covers three to six months but some may even offer more.

Check Your State

If you live in New York, New Jersey, Hawaii or Rhode Island, these states require employers to cover up to twenty-six weeks of your disability time. The laws are constantly changing so your state may also have a required mandate. Either way, this will enable you to purchase a less expensive plan to add to the sixty to eighty percent you may already be covered under but obviously unable to live with if disabled.

Self-Employed

If you are a freelance employee, short term disability insurance can save you from financial ruin. Although temporary, it will enable you to get back on your feet and quickly back to work more so than someone that is covered by a corporate plan that may have more of a cushion.
A short term disability policy is less expensive than long term and can be just the right amount of coverage you need until long term can be considered.

About the Author: Matt Tomasino is a full-time writer with a passion for personal finance and insurance. He writes credit repair, bankruptcy, insurance, and money saving techniques frequently at CreditLoan.com.