Weighing Short-Term Disability Insurance: Pros vs. Cons

Weighing Short-Term Disability Insurance: Pros vs. Cons

What would you choose if you had to decide between your home and earning potential?

When protecting your assets, most people think their home or investment portfolio is the most crucial thing they have. In reality, your earning potential is usually your most important asset. Everything from paying your mortgage to saving for a child’s college education depends on your ability to earn money from your job.

Financial hardship from an injury or illness could lead you to burn through your savings, sacrifice your quality of life or even lose your home. According to the 2020 Insurance Barometer Study by Life Happens and LIMRA, 63% of working Americans couldn’t make it six months before financial difficulties set in—and 14% said they would have problems immediately. An already unfortunate situation is often compounded by hefty medical bills that pile up on top of everyday expenses.

One of the best ways to protect your future earning potential and keep you and your family on solid financial ground is through a disability insurance policy.

Disability insurance steps in to help cover those expenses when illness or injury prevents you from working—it pays a percentage of your salary if an illness or injury prevents you from working. Depending on your policy, disability insurance covers your lost income from a few weeks to your entire working life.

What is Short-Term Disability?

Short-term disability is insurance that pays a monthly benefit to employees who are temporarily unable to work due to illness or injury. This is the most common type of short-term disability plan, and it’s available through your employer—although only in a handful of states where companies are required to provide it.

Short-term disability plans typically cover up to two years, but companies can set their terms and conditions regarding eligibility, duration, payments, and other provisions.

What are the PROS of Short-Term Disability? 

It provides monthly income when you’re ill or injured.

The aim of a short-term disability plan, whether it is self-funded or sponsored by an employer, is the same: it should provide you with a monthly benefit if you cannot work because of a disease or injury.

Although this varies, short-term disability payments typically pay between 40% and 60% of your monthly salary. These benefits offer stability and peace of mind, allowing you to concentrate on your health and recovery (some policies even pay 100% of your weekly salary for some time).

Most short-term disability policies are “Own Occupation” plans.

Disability insurance plans define “disability” in one of two ways:

  • Own occupation: You are disabled if you cannot do your actual work.
  • Any occupation: To get disability insurance benefits, you must prove that you cannot do any work.

Fortunately, most of the short-term disability policies are Own Occupation policies. However, some companies have the Own Occupation plan but use the definition of Any Occupation, which will require you to prove that you cannot perform your work. It’s still important to check the definition of disability in your policy. 

What are the CONS of Short-Term Disability? 

The policy might not cover all health conditions.

Most STD plans have exclusions and limitations. Check these common exclusions and limitations: 

  • Pre-existing conditions
  • Self-inflicted injuries
  • Normal pregnancy
  • Workers’ compensation

Waiting periods are common in STD Plans.

The elimination time for short-term disability claims can range from 0 to 90 days. However, a waiting period of seven days is most commonly used. Check your plan’s terms and conditions carefully, as some policies offer varying elimination periods for illnesses and injuries.

Every short-term disability insurance has its quirks and difficulties. It is essential to speak with a knowledgeable disability insurance lawyer if you have any questions about the specific terms of your policy. By doing this, you will be sure that you are receiving trustworthy, honest advice from a qualified individual.

Heroes Sick Pay provides honest and transparent coverage of policies. Visit our website once you are ready to check your options!

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