Money

Benefits of Short-Term Disability Insurance

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If you're faced with a debilitating injury or illness, short-term disability insurance can be a lifesaver. Usually offered by businesses and other employers as an employee benefit, short-term disability insurance is sometimes used in conjunction with long-term disability coverage. This type of coverage provides payment of a portion of your salary every month you're unable to work.

Note that Ethos does not sell disability insurance, but understanding how it works—and knowing what your employer offers—are an important part of your overall financial plan. Here, we'll answer some of the questions you may have about short-term disability and how it's applied in individual circumstances.

How do I get short-term disability insurance?

For many people, short-term disability coverage is part of their benefits package at work. Their employer will pay all or part of the premiums for the policy, which are relatively low-cost. 

If you're self-employed or unemployed and wish to apply for short-term disability, you'll find policies available in the insurance marketplace; however, the cost will be higher. 

If you're wondering how to apply for short-term disability, your best bet is to approach your company's human resource office and find out if it's available.

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What qualifies for short-term disability?

Every insurer will have its own list of restrictions on what illnesses and injuries qualify for short-term disability. For many insurers, pre-existing conditions aren't covered; others won't cover childbirth unless there are complications from the birth. Some policies pay out on claims if you're unable to perform the job you were hired for; others only pay out if you're unable to work at any job. 

Your company may offer coverage for several short-term disability qualifying conditions. The best way to understand them is to talk to your benefits administrator.

How long does short-term disability last?

As the name suggests, short-term disability insurance isn't intended for long-term care. Generally, your employer will determine the length of time during which you can receive payments, and that period is usually anywhere up to one or two years. If you're disabled for longer than this time, your long-term disability insurance will kick in after that if you have it. This is why short and long-term disability insurance are often sold together. They work in synchronicity with each other to provide comprehensive care for those in need.

How much does short-term disability pay?

Short-term disability pays a percentage of your regular salary. That percentage is usually more than 50% and may be as high as 80%. It's rarely the total amount of your salary. Because of that, it's a good idea to have some savings tucked aside to help you maintain your standard of living if you suffer a disease or illness—short-term disability pay can fall short. 

You may be able to stipulate what percentage of your salary you'd like to receive when you apply for short-term disability. But keep in mind that the higher the percentage, the more you'll pay for your premium.

How does short term disability insurance work?

If you're injured or experiencing an illness that doesn't allow you to work, you'll want to know how to claim short-term disability payouts. First, you'll need to obtain written confirmation of your condition from a medical professional. You'll submit this to your benefits administrator, unless they have you submit it directly to the insurer. There may be a short waiting period while your claim is processed, but your first check will generally arrive somewhere between a week to a month after you file the claim.

Can I buy my own short-term disability insurance?

Yes, you can, but it can be pricey to buy independently rather than as an employer group policy. When you're looking at the pros and cons of short-term disability, that's probably the biggest "con." If you're self-employed or your employer doesn't offer it, you may be able to purchase a policy. But it can be a better idea to work towards having a nest egg equal to six months or so of your salary that you could draw on in the event of a short-term disability.

Does Ethos Life have short-term disability insurance?

Ethos Life focuses on term and whole life insurance policies rather than disability insurance. You can explore our policies at the Ethos website and find answers to all your life insurance questions, from Do I need life insurance? to When should I reevaluate my life insurance needs? 

Like disability insurance, life insurance can be an essential part of your financial landscape, providing benefits for a time when you and your family need them. Check out your customized rate at Ethos today.

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