The following is presented for informational purposes only.
a minor eye injury that puts him out of work for a month. a car accident that leaves him with neck and back pain too intense to overcome. if he can’t work, often he can’t earn money, and without income, how can he cover his bills?
The answer for some may be short-term disability insurance. If you become ill, diagnosed with a medical condition, or have an accident that temporarily prevents you from working, short-term disability can replace some of your income until you get back on your feet.
“short-term disability is important because it can protect your savings and investment accounts in the event you are temporarily unable to work due to a disability,” says ben smith, founder and financial planner of cove financial planning. “Without coverage, many people are forced to go into debt, use their cash reserves, or worse, their retirement savings, to pay bills and living expenses in a case where they have no income due to a disability.
Almost all workers could potentially benefit from having short-term disability insurance, but there are some cases where having that extra protection is even more important.
you are self-employed
If you’re self-employed or have a small number of employees, you’ll definitely want to consider getting short-term disability insurance.
See also: Frequently Asked Questions
“doctors, vets, cpas, and similar professionals who have their own practices are often self-employed and may not have coverage, and may also be earning high incomes that lead to expensive lifestyle costs month to month. month”. says ian bloom, a cfp® and financial life planner for nerds. “In some cases, a disability would drain your savings pretty quickly.”
You’ll also want to consider short-term disability insurance if you’re self-employed full-time. freelancers do not get sick leave or get coverage through an employer. therefore, if they are unable to work and their cash flow stops, it could put them in financial jeopardy.
you don’t have enough savings
It might be okay to waive short-term disability coverage if you have six months of income in savings, as well as a sizable cushion beyond that, says Bloom. When determining if you have enough savings to cover your living expenses when you are disabled, keep in mind that if a disability occurs, you will likely have medical expenses (doctor visits, treatments, medications) in addition to your regular expenses. monthly expenses.
On the other hand, let’s say you have a large cash reserve. in that case, you may not need a short-term disability. “This means they can ‘self-fund’ a possible temporary loss of income during a disability,” says Smith. and if your spouse or partner has a high-paying job and can cover household expenses for a short time, he or she may not necessarily need to be covered for short-term disability.
“every situation is different, so it’s important to know your unique options and needs,” says smith.
your employer doesn’t offer it
If your employer doesn’t offer short-term disability, it might be worth trying to get one on your own. And even if your employer offers short-term disability insurance, it may not be enough for your potential financial needs.
To gauge this, review coverage amounts and terms with your employer. You’ll also want to assess what your current living expenses are and add additional expenses for medical treatment. If your current coverage doesn’t match your costs, you may need to add additional coverage on your own.
tips for buying for short-term disability
A few tips if you’re thinking about purchasing a short-term disability plan:
seek coverage through your employer first
You may be able to get coverage through your employer, which is often less expensive than buying a private plan, Smith explains. Plus, it’s usually easier to get coverage through a group plan. When it’s time to renew your company benefits, be sure to ask about short-term disability coverage if that’s something you’re interested in.
check to see if the state you live in offers short-term disability
only five states in the us. uu. offer their own short-term disability programs: california, hawaii, new jersey, new york and rhode island. coverage amounts and time periods vary. Even if you live in a state that offers it, you may want to get additional coverage to make sure you have enough to live on in case you need it.
check deletion period
An elimination period is the amount of time you must wait for your insurance coverage to take effect. For example, a 14-day elimination period means you must wait 14 days after becoming disabled before receiving any plan benefits. Elimination periods for short-term disability are typically 7 or 14 days, while some can be as long as 30 days. “In most cases, the longer the elimination period, the lower the insurance cost,” Smith says.
And even if you opt for a short-term disability plan, you may still need some cash reserves to cover your expenses until the elimination period ends.
if you’re dealing with a temporary loss of income and need access to local counseling and resources, mmi’s nfcc-certified counselors can help. we are available 24 hours a day, 7 days a week to provide guidance and support.
See also: Participating insurances | Geisinger