Short Term Disability Insurance

Short term disability insurance, of all insurance types, provides one of the best returns per dollar in peace of mind. More than 30% of people suffering from a short term disability once in their career. Half of the 30% of those disabled will be disabled for more than five years, without an income. This is why short term disability insurance has become a near necessity among the working class.

What is Short Term Disability Insurance?

Short term disability insurance is insurance that is meant to act as an income replacement during a disability that keeps you out of work. While disabled, short term insurance can pay a fraction of your salary all the way up to 100% of your salary, depending on your coverage. Keep in mind that short term disability insurance is not meant, however, to displace or add on top of workers compensation insurance, and covers only disabilities that happen during time spent out of work.

Most often, disability insurance pays out to the tune of 40-70% of your salary while disabled, though smaller and larger policies do exist. Those with ample savings may opt for a 40% plan, while those who have little in savings or high expenses may want a policy that protects 70% or more of their income.

As with all insurance types, short term disability insurance is very frequently capped. Often, beneficiaries receive payouts for a maximum of two years. Also, your monthly payouts may be capped at a certain dollar figure. For this reason, it is important to maintain coverage equal to your current salary, since a policy purchased ten years ago may not reflect your current earnings or income needs. Should you become disabled, your monthly benefits might be too low to maintain your standard of living. So, with each raise, or every few years, check with your insurance policy and provider and alter your coverage as it is needed.

What is a Short Term Disability?

Practically anything that keeps you out of work can be considered a short term disability. Included in these are serious illnesses like cancer or problems with vital organs, injuries of any type, residual pains such as arthritis pains.

If an injury caused by non work related conditions keeps you out of work, it is covered by your insurance. Be prepared to prove the accident is not work related.

Buying Coverage

Because short term disability insurance is capped to a percent of your income, total dollar payout, and the length of time during which you can receive benefits, the insurance itself is very inexpensive. Most people will be able to purchase a policy for under $25 per month through their employer, and will not have to complete a physical evaluation or undergo any testing to receive insurance. As such, it is one of the easiest insurances to purchase, use, and provides an excellent return on investment should you ever become disabled.

Take note of the important terms and condition with each policy. Some will begin coverage the same day as you apply, while others will take up to a month before acceptance and payout. Also, many short term disability insurances will or will not pay for pre-existing conditions, while others will pay only when the conditions worsen to a degree that is considered to be disabled. In most cases, disability insurance will not be retroactive, and will not cover costs that happened before the policy was created, signed, and paid for.

All told, short term disability insurance provides a high return on investment, is inexpensive, and is a great way to protect against a lost income for a period as long as two years. With the sheer number of concerns most families have already, it's nice not to have to worry about a lost income.

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