If you were ever temporarily disabled and unable to work, would you have a plan in place to cover your living expenses? Some employers provide short-term disability insurance, which covers part of your income in the event that you can’t work for three to six months. If your employer does not provide this type of insurance, you might be interested in locating your own policy.
So, who needs short-term disability insurance?
Those whose employers don’t provide a policy. Investigate your employer’s offerings, because this benefit is often not widely advertised. Check on the exact benefits, as well, to be sure they will be sufficient to meet your needs.
Those who have long-term disability insurance, but not short-term. Many employers offer both types of disability insurance, but not all. Since long-term disability insurance often requires a six-month waiting period, you could exhaust your savings before reaching the end of that term.
Those who are self-employed. Obviously, you won’t have employer-provided benefits in this case. Carefully evaluate your insurance needs, and consider short-term disability insurance to provide much-needed income in the event of an accident or illness that prevents you from working. This rule also applies to independent contractors.
Those who can’t wait on SSDI. Approval for Social Security Disability Insurance often requires a wait of six months or more, and your disability must fall under certain rules. In the meantime, you could use up any liquid assets available to you. A short-term disability insurance policy can help to close that gap and ease the financial burden.
Keep in mind that most short-term disability insurance plans will provide about 60 percent of your lost wages, up to a specified dollar amount. The exact payout amount, and the length of payments, will depend upon the policy you select and the premiums you pay. Generally speaking, short-term disability insurance can provide vital income during a difficult period of your life, but you might need to supplement this income with other planning measures, depending upon your financial needs.