What Exactly Is Short-Term Disability Insurance?

Short-term disability insurance is an important resource you may have heard about through your job or private insurance agent. Understand what short-term disability insurance is as you decide if it's right for you.

Short-Term Disability Insurance Defined


Short-term disability insurance is a benefit that covers a temporary disability caused by an illness or injury. Usually in effect for a short time period, it pays the policy holder up to 66-2/3 percent of their weekly earnings.  It may also include a benefit that helps an ill or injured employee return to work.

The waiting period to file a short-term disability insurance claim is up to two weeks after you become ill or injured. Be prepared to show medical proof of your illness or injury. Benefits usually last from three to six months. Your policy will have a maximum per-month benefit cap.

Why You Need Short-Term Disability Insurance

Short-term disability insurance is designed to provide financial assistance if you suffer an illness or are injured. The top five reasons people purchase short-term disability insurance include:

  1. Pregnancy
  2. Injuries
  3. Joint disorders
  4. Digestive issues
  5. Cancer
If one of these or any illness or injury affects you and you have to take time off work, do you have enough financial resources to manage your living expenses and other financial obligations? In essence, short-term disability insurance protects you and your resources. It covers your living expenses and gives you peace of mind until you can return to work.

An Example of how Short-Term Disability Insurance Works

Here's an example of how short-term disability insurance can help you.

Let's say you acquire a bad infection and must be on bed rest for a few weeks. Instead of worrying about money, tapping into your savings, racking up credit card debt or pushing to return to work before you're healed, rely on short-term disability insurance.

Your policy only covers a portion of your weekly income, but it is a big help. If your salary is $32,000 with weekly gross earnings of $615.38, your weekly short-term disability insurance benefit will be approximately $406.15. You can use that money to pay any expenses, including rent, groceries or other bills.

Who Should Buy Short-Term Disability Insurance?

Short-term disability insurance is important for almost anyone, especially if you don't have a big nest egg saved for emergencies. Review your financial portfolio with your financial advisor as you decide if a short-term disability insurance policy is right for you.

How to Buy Short-Term Disability Insurance

Talk to your Human Resources manager about short-term disability insurance. You can also purchase a policy through your personal insurance agent. It's invaluable coverage that protects you and your financial security.
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