With so many different types of insurance policies available to consumers today, it is often difficult to determine which are necessary and which are a waste of money. As a general rule, insurance is the type of protection you purchase with the hopes of never having to use it. No one wants to be in a car accident or become sick, however having insurance in the event such incidents occur can be lifesaver for your budget. The same is true for short term disability insurance. This type of insurance is often overlooked when consumers consider necessary insurance coverage. Unfortunately, while few people imagine finding themselves disabled and unable to work, it is a reality for an estimated 3 out of 10 workers.
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Here we look at basic information regarding short term disability insurance to determine if this is something you may need.
What is Short Term Disability Insurance?
Short term disability insurance provides a level of protection against the loss of income should you find yourself unable to work for several weeks or months as a result of injury or illness. Considering the fact that 1 in 7 workers find themselves unable to work for five years or more as the result of a disability, this is a very important insurance to consider. Short term disability insurance will provide a percentage of your salary while you are unable to work. The amount paid is usually between 40 and 65 percent of your base salary prior to your disability.
How Long Does Coverage Last?
How long you have coverage depends on many factors. While most short term disability coverage lasts between three and six months, some individuals may receive payments for up to two years. Short term disability insurance is designed to help people who are injured or sick in the short term, not indefinitely. If you need to insure against a longer period of disability, you should also consider a long term disability insurance, which typically protects you for two to five years.
There is also usually a cap on the amount a person can receive each month. It is important to fully understand the benefits offered by the policy to ensure you have the protection you need should you find yourself unable to work as a result of a temporary disability.
Applying for Short Term Disability Insurance.
Short term disability insurance is available to both individuals and businesses. Check with your human resources department to learn if there are any short term disability programs available through your employer. In some cases an employer will provide group coverage which reduces the overall out-of-pocket cost for those who participate. If coverage is not available through your employer, you can also purchase this type of insurance on an individual basis.
Who Needs Short Term Disability Insurance?
To determine if this is something you need, ask yourself what would happen if you were unable to work (and receive a paycheck) for several weeks or months? If you can’t afford to miss work, then you should consider a short term disability insurance policy to provide extra peace of mind that you are covered if you become temporarily unable to work.
Tisha Tolar is a co-owner of Trifecta Strategies, LLC and the author of Gen X. When she is not busy being a fiction writer, she writes personal finance articles for several web sites, including Moolanomy.com.
If you have a policy through your employer, do you have to use any accrued sick time before the short term disability insurance benefits kick in?