Intro to Short-Term Disability Insurance
August 26, 2021
Being your own boss has its perks but it can put you in situations where you have to make difficult decisions. Could you handle a sickness or injury that prevented you from working for 2-6 months? Would you have to consider deferring the care you need or rushing your recovery? Short-Term Disability Insurance is designed to help you in situations like this so you can take the time you need to recover and focus on yourself.
What is Short-Term Disability Insurance?
Short-term disability insurance (sometimes abbreviated as SDI) provides you with coverage if you are sick or injured enough that you can’t work. Times like these are especially tough because you’re dealing with increased medical costs, missing income, and all of your regular expenses. SDI helps you out by paying you directly with cash that you can spend on whatever you need. With some peace of mind, you can focus on your recovery so that you’re able to bounce back as best you can.
Why might I need Short-Term Disability Insurance?
Costs can add up quick if you’re put out of work for several months due to an injury or illness. Short-Term Disability Insurance can help you replace some of your missing income while you recover. This is especially helpful if you don’t have savings, if your savings are tied up in non-liquid assets, or if you are reluctant to use your savings for these kinds of circumstances. Forgoing treatment or rushing your recovery can have lasting effects on your health and ability to work. SDI is a good consideration for you if it would improve your ability to take care of yourself, making it an investment in your future.
When do benefits kick in? How long do they last?
Most policies will have specific terms that determine what kind of illnesses or injuries will be covered. Generally, they need to be significant enough that you are unable to perform your normal employment duties. Some plans differentiate between “total disability” and “partial disability” based on the severity of your condition. Partial disability events will typically only pay you a portion of your benefit amount whereas total disability events pay the entire amount. You can talk to one of Venteur’s benefits advisors if you have any questions about what might be covered.
There is a waiting period before coverage kicks in. This is known as the “elimination period” and starts the day you have a qualifying injury or are diagnosed with a qualifying illness. Elimination periods can be between 0 days and several months, with shorter elimination periods having higher monthly premiums.
Once you’re past the elimination period, you’ll start getting paid. You’ll keep getting paid until you’re well enough to work again or you reach the end of your “benefit period”. Benefit periods can be between several weeks and several years long, with longer benefit periods having higher monthly premiums.
How much benefit might you need?
Part of purchasing Short-Term Disability Insurance is deciding how much of a monthly benefit you’ll receive while you’re out of work. A baseline recommendation is to consider getting coverage between 40% and 60% of what you’d normally make while working. Having savings, passive income, or an employed spouse might help you get through times like these, in which case you may not need as much coverage. But if your job is the only way you make money and you don’t yet have savings that you can tap into, you may want to consider more coverage.
Considering starting a family? Your pregnancy is covered.
If you’re thinking about starting a family in the future, you may want to consider getting Short-Term Disability Insurance. SDI policies cover your time away from work after your delivery, allowing you to take maternity leave and bond with your newborn. Keep in mind though that this benefit typically has a special waiting period starting the day you enroll. If your delivery occurs before the waiting period is over, it won’t be covered. As a result, this benefit is intended for those considering a future pregnancy and not necessarily for someone who is pregnant when they enroll. Pregnancies may have other restrictions too, like a shorter benefit period. You can talk to one of Venteur’s benefits advisors if you have any questions about how a pregnancy might be covered.
What are some other things that might be covered?
Short-Term Disability Insurance is ideal for events that put you out of work temporarily which you’ll likely recover from within 2 to 6 months. There are many types of injuries or illnesses that might qualify, but here are some examples to consider:
- A digital artist who breaks their hand while hiking and is unable to draw
- A sales consultant who contracts COVID-19 during travel and requires hospitalization
- A real estate agent who develops appendicitis and needs their appendix surgically removed
Interested in what we have to offer?
We’re excited to be able to offer to you Short-Term Disability Insurance if you’re interested in enrolling. Login to our app to learn more about the plans we offer. Or, if you’re still not sure if Short-Term Disability Insurance is right for you, you can also log in to schedule a complementary benefits consultation. We can help you decide if SDI is right for you and what level of coverage you might want.