Short Term Disability Insurance

Podcast: Play in new window | Download

Your chances of becoming disabled at some time in your life are high. Short term disability insurance protects you and your loved ones from financial struggles should you not be able to work if you become disabled.

Fortunately, we work with some of the highest rated short term disability insurance policy providers in the United States. We can get you the best pricing and coverage for your hard-earned dollars.

Short term disability insurance is an affordable option to protect your income, home, and family should you become disabled in the future.

What is disability insurance?

Disability insurance replaces part of your income if you cannot work because of an injury or illness.

Why do I need disability insurance?

25% of all twenty-year-olds living today will become disabled before retirement age. The average long-term disability and inability to work will last 34.6 months (counsel for disability awareness statistics). Almost 3 years is a long time to survive and provide for your family without a steady income.

What causes disabilities to occur?

Back and neck pain, joint disorders, muscle injuries and damage, and foot and ankle injuries or disorders are the leading causes of disability claims.

Cancer and complications from other diseases are also the primary reasons for disability insurance claims to be filed.

What are the different kinds of disability insurance?

There are two types of disability insurance policies – short term and long-term.

Short term disability insurance (STD) is designed to pay a percentage of a worker’s salary for a specified period. If a person is injured or becomes ill and cannot perform their regular duties at work, a short term disability policy will pay between 40 and 60% of an employee’s gross weekly income.

Although 40 to 60% income replacement may seem low, remember that, if you’re paying for the policy with after-tax dollars, the payment of short term disability benefits is tax-free.

Long-term disability (LTD) is much like short term disability, but it is designed to last longer than short-term disability. Some long-term disability policies pay out as long as you are disabled until age 65.

To qualify for most disability benefits, you will have to be under the regular care of a physician. Usually, the insurance companies need documentation from a medical professional to support your disability claims.

Elimination period

Most disability policies include an elimination period. An elimination period is a number of days that must pass after your accident, injury or illness diagnosis for your benefits to begin.

Most plans allow you the option of selecting 30, 60, 90, or even 180-day elimination periods for short term disability as a result of an accident, injury, or illness.

A shorter elimination period is more favorable for the policyholder but is more expensive. If you are supplementing a work disability policy, you can save money by selecting a longer elimination period for your privately-owned disability policy.

Are disability benefits taxed?

If your disability insurance is provided through your employer with pre-tax dollars, your disability payments will be taxable. If your disability insurance is privately owned or you pay for it with after-tax dollars through your employer, your disability payments will be tax-free.

Disability insurance for self-employed individuals is also available and advisable since you work for yourself and probably cannot produce income if you are not working.

If I’m disabled, do I get all my disability benefits?

If you are totally disabled, you will be eligible for all of your disability benefits. If you can return to work with restrictions, you may be eligible for a portion of your disability benefits.

If you are not totally disabled but cannot perform at least 50% of the “material and substantial duties,” you may be eligible for partial disability benefits.

How much do disability policies cost?

Disability policy pricing depends on several factors:

• Age
• Gender
• Tobacco use
• Pre-existing conditions
• Occupation (roofer, accountant, etc.)
• The amount of income to be replaced
• The length of time your benefits are available (one year, two years, until age 65, etc.)
• The length of time before you qualify for benefits (30, 60,90 days, 180 days, etc.)

Can I get paid a disability if I have a pre-existing condition?

Pre-existing conditions like high blood pressure, high cholesterol or diabetes may be excluded from coverage for most disability insurance policies.

Once approved for a disability policy, your policy is guaranteed renewable up to a specified age (as defined in your policy). Your policy pricing may change in the future…but it’s not likely.

The insurance company cannot raise your monthly premium or others with the same policy. If the insurance company wanted to raise your rates, they would have to raise everybody’s rates for people in the same rate class.

Rate “class” includes people of the same age and gender, policy type, elimination period, benefit period, occupational class, tobacco status, and even the same state or geographic area.

Can my disability policy be canceled?

You can cancel your disability policy at any time. The insurance company, however, cannot cancel your disability policy unless you stop making payments on your plan. Most disability policies are sold on a “guaranteed renewal” or “non-cancelable.”

Should I purchase disability insurance?

You are likely to experience a short-term disability at some time in your life. If you don’t have sufficient money in the bank to replace your income for at least one year because of an injury or disability, disability insurance is a wise decision.

Check with your employer to see if disability insurance is available for your benefits plan. This is an affordable way to obtain disability insurance. The only drawback is that, when you leave your employer, your disability coverage will terminate (leaving you at great financial risk).

Many employees have short-term disability policies at work that replace only 40 to 50% of their gross income. If you cannot afford to take that significant of a pay cut, you can purchase a private disability policy through Life Wealth Win to supplement your work provided short-term disability coverage.

Should I purchase short-term or long-term disability insurance?

Purchasing short term disability insurance or long-term disability insurance will depend on your budget and financial needs. Because most injuries or illnesses are resolved within 24 months, a short term disability policy may be more appropriate and affordable.

Conclusion

If you need a short term disability insurance, call us to help you understand your options. At Life Wealth Win, we specialize in healthy to high-risk life insurance and disability cases.

If you are in need of a short term disability policy, we can help you get the best rates.

Call us, and we can help analyze your needs and budget restrictions to identify which policy is most appropriate.