What is short term disability insurance?

Short term disability insurance plan pays a percentage (generally in between 40% to 70%) your basic salary if you become sick/disabled and can not perform your duty/work for a short period of time (generally 9 to 52 weeks). You can buy short term disability insurance plan through your employer or you can buy your own directly from a company that provide short term disability insurance.

How short term disability insurance work?

If you have short term disability insurance (through your employer or you may buy on your own), you pay a monthly premium. When you become sick (due to illness or injury) and can not perform your job, you apply for a benefit under the short term disability insurance plan. To be eligible for benefit you must furnish proof of your illness/injury/disability from your treating doctor.

Some employer may require you to use all your sick days before you become eligible for a benefit of short term disability insurance.

How much and how long does short term disability insurance pays?

Typically short term disability insurance pays 40-70% of your pre-disability pay. For example if you earn USD 1000 per week and you buy short term disability insurance plan for 50% coverage, you will be paid USD 500 per week for your sickness duration after fulfilling all the laid down criteria. Generally short term disability insurance pays for 9 weeks to less than a year (52 weeks).

Is there any difference between different short term disability insurance?

There are some differences in different short term disability insurance.

• In short term disability insurance definition of disability is inability to work in your own job, but you may be able to work in other jobs. But in general disability means inability to work in any job.
• Waiting period may vary in different short term disability insurance from a week to up to 6 months. In general the longer the waiting period the lower is the premium. The waiting period for different types of disability may also be different with same short term disability insurance plan.
• Different short term disability insurance plans may have different benefit rates or same short term disability insurance plan may have different benefit rates in different time, i.e. in the beginning few weeks’ higher benefits, but later on the benefit rate may reduce. Some short term disability insurance plans may change benefit rates during the benefits period.
• Different short term disability insurance plans may have different exemptions, for example, most short term disability insurance plans of different insurance companies exempt disability benefits for attempt to suicide, disability due to attempting to commit crime, war, drug abuse etc. Some preexisting conditions may also be exempted from disability benefits. If you buy group short term disability insurance plan through your employer, “on the job injuries” that are covered under workers compensation insurance are also not covered under short term disability insurance plans.

Consider all the above mentioned points before buying short term disability insurance, on your own or through your employer.

Image: Teerapun / FreeDigitalPhotos.net

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