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Pros and Cons of Short-Term Disability Insurance

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What is short-term disability insurance?

Because you have worker’s compensation insurance doesn’t automatically mean that you won’t have any need for disability insurance. This is because not all types of disability insurance are the same, and so, you don’t expect to get the same benefits.

What is Disability Insurance?

Disability insurance which is also known as disability income insurance, DI is a type of insurance that will provide income in the event a worker is unable to perform their work due to disability.

The Two Major Types of Disability Insurance

The two types of disability insurance available in the United States are:

  • Short-term disability insurance
  • Long-term disability insurance

These two major types of disability insurance are categorized based on the length of the coverage.

What is Short-term Disability Insurance?

This is a type of disability insurance that pays benefits to the policyholder anywhere from three to six months, and sometimes up to a year (after the elimination period). 

You can get short-term disability insurance coverage in the form of a group plan from your employer as part of the employee benefits package. However, not all companies have to offer it since the state government doesn’t mandate them to do so.


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What Does Short Term Disability Insurance Cover?

Your short-term disability insurance coverage that comes from your employer as one of their employee benefits packages cover the following:

  • Childbirth
  • Any sickness that lasts for a few weeks to several months
  • An injury that denies you the privilege of working actively and requires a few weeks to a few months to heal from.

In this article, we shall be discussing the advantages and disadvantages of the two key types of disability insurance.

Pros of Short-term Disability Insurance

Short-term disability insurance is activated during the birth of a child
  • Short term disability insurance will help you pay for your day-to-day expenses while you rest and recover from the ailment in a few weeks or months.
  • Pregnant women utilize the opportunity short-term disability insurance offers them to take time off work.
  • If you live in these states, California, Hawaii, New Jersey, New York, and Rhode Island, you will enjoy short-term disability programs.
  • You can get it from your workplace as a part of your employee benefit package.
  • If you eventually can’t make it back to the office after your short-term disability insurance benefits stop coming and there’s no long-term disability coverage, you can use the money you have received from STDI to start some kind of business.

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Cons of Short-term Disability Insurance

  • This is one of the types of disability insurance coverage that only lasts for a few months or at most a year.
  • You will run out of money very quickly if the disability lasts more than a year.
  • You will only receive 60% of your basic salary as your disability insurance benefit. If you live from paycheck to paycheck, you will soon run into a financial mess.
  • Having an emergency fund that can cater for your living expenses for a period of six months is far preferable compared to having a short-term disability income benefit.

What is the Difference Between Short Term and Long-Term Disability Insurance?

What is the Difference Between Short-Term and Long-Term Disability Insurance

Some of the reasons for short-term disability insurance is to keep paying you 60% of your salary during the birth of a child, a lengthy illness, or a disabling injury while long-term disability insurance covers the following: arthritis, back pain, cancer, depression, diabetes, and heart disease.

Long-term disability insurance replaces 40% to 60% of base salary while short-term disability insurance replaces 60% to 70% of the base salary.

Long-term disability insurance coverage continues until disability ends or in some cases, after a set number of years or when retirement begins while the other type of insurance is only for a few months or at most a year.

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Do I Have to Pay Back the Money I Received from Short Term Disability Insurance When I Resume Work?

Whether you will refund the money you received from your short-term disability insurance benefits depends on the terms of your policy.

The best short-term disability insurance companies are Mutual of Omaha, Assurity, State Farm, and LifePreserve.

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