Short term disability insurance pays the policy holder a portion of his or her salary when the insured becomes disabled due to a qualifying illness or injury. Most policies exclude on-the-job injuries as qualifying disabilities because these injuries are generally covered under workers’ compensation insurance.
These short term disability plans are designed to pay covered individuals a portion of their weekly salaries up to a maximum period. The majority of policies pay subscribers from 40 to 65 percent of their weekly salaries, but benefits may vary with insurance providers. Additionally, most short term disability plans include caps which limit the total amount of benefits payable.
A short term disability is generally defined as a disability that prevents the insured from performing his or her job duties for a specified period of time. Most short term disability coverage ends after three to six months, but some plans pay benefits up to two years.
Most plans have a waiting period which means that benefits do not commence until the insured his missed a specified number of days due to the disability. A number of plans waive that waiting period for injuries, but virtually all plans require that subscribers adhere to the waiting period restrictions for illnesses. The reason for this is that it often takes longer to determine that an illness is serious enough to be considered disabling.
When short term disability plans are purchased through an employer, disabled employees may be required to use all available sick leaves before disability benefits begin. Individual plans purchased through an agent may not include these restrictions.
Benefits may sometimes be made retroactive. This would typically happen when a minor injury or illness becomes disabling. When this occurs, policy holders could receive benefits retroactive to the first sick day.
As the name suggests, short term benefits are intended to fill a short term need. When benefits are exhausted, workers with long term disability insurance may apply for those benefits. It is important to remember that long term benefits do not typically commence until the worker has been disabled for a period that may be long as six months. A short term disability policy bridges the gap from sick leave to long term disability coverage.
Since most disabilities are of a short duration, this coverage is very popular with workers. Few people have the financial resources available to sustain themselves and their families if they were to be unable to work for weeks or months.
Statistics show that as many as 20 percent of all workers will sustain a disabling illness or injury at some point in their lives. That is a sobering fact. Few of those workers can face a disability without financial disaster. Short term disability insurance often provides disabled workers with their only option for surviving a potential financial crisis.
Coverage is inexpensive and easy to obtain. A number of employers offer this insurance to employees. For those workers without this option, coverage can be obtained through private insurance agents. Most plans can be purchased for just a few dollars per week. When financial security and peace of mind can be bought for such a low rate, it only makes sense to purchase short term disability insurance.