Articles
Short-Term Disability Insurance Key Component
to Financial Protection

The recent economic downturn may be close to over, but the lessons learned will likely remain in the minds of workers for years. Perhaps most poignant, is a greater appreciation for a steady paycheck and the importance of protecting that income. As workers strive to safeguard their finances, one area that garners little attention but represents an area of insufficient protection for many workers is disability insurance. In fact, one in four of today’s 20-year-olds will become disabled before reaching age 67. 1

However, most Americans underestimate their risk of experiencing a disability and overestimate the resources available to them in such a predicament. Considering that 65 percent of working Americans say they would only be able to pay bills for less than a year if their income stopped , 2 there is a growing need for voluntary disability insurance.

What is Voluntary Disability Insurance?

Voluntary short-term disability insurance is one of many voluntary insurance policies available to help people cope with incremental out-of-pocket costs associated with serious accidents or illnesses — costs major medical was never intended to cover. In the event of a physician-documented disability, policyholders receive cash benefits that are often used to help pay for daily living expenses, such as rent, gas, groceries, babysitting and other necessities, as determined by the policyholder.

A voluntary short-term disability insurance policy pays benefits (i.e. a monthly amount that is a percentage of your gross income) for a set period of time while you are disabled. Depending on an individual’s situation and short-term disability coverage applied for, some policies pay benefits up to 24 months for a disability.

If disabled, workers may not only lose the ability to earn a living, but also may lose savings, retirement funds, or even their home. The financial obligations can be overwhelming. Disability insurance plays an integral and important role in financial planning and safeguarding financial futures. It can ensure you will still have a source of income and help take care of your bills while you’re focused on taking care of yourself.

Who Needs Voluntary Short-Term Disability Insurance?

Any working adult who is not currently covered by private or voluntary short-term disability insurance is a candidate for applying for such coverage. In fact, about 100 million workers are without private disability income insurance. 3

The need for disability insurance protection is crucial, particularly for primary wage-earners. Disabling injuries or illnesses can lead to significant medical bills, changes to your home or transportation, and more. Therefore, anyone who works — regardless of whether they are single, married, with children or without — needs to consider voluntary disability coverage.

Why do I Need Short-Term Disability Insurance?

Although many workers assume that they have coverage through their employer, a growing number of companies are cutting back on the amount of disability coverage they offer. A decade ago, it was commonplace for a company-paid disability plan to pay an employee 70 percent of income if disabled, but those rates have diminished alongside the economy and employees today often receive less than 40 percent.

Furthermore, most people assume they will receive benefits from Social Security or worker’s compensation. However, that is most often not the case. In fact, 65 percent of initial Social Security Disability Insurance (SSDI) claim applications were denied in 2009. Also, the average monthly benefit paid by SSDI in June of 2010 was $1,065 a month. More than half (52%) received less than $1,000 per month. 4

As for depending on workers’ compensation to cover your disabling injury or illness, consider that 90 percent of disabling accident and illnesses are not work related, meaning workers’ compensation doesn’t cover them. 5

The bottom line is that weathering an economic depression has opened eyes to the value of disability insurance. Americans are recognizing the financial vulnerability that comes from being under protected and underinsured. Neglecting to secure disability insurance is a prime example of how saving a few dollars in the short-term can cost thousands in the long run.


Juanita

My husband had two strokes. After my claims were processed on my Aflac short-term disability insurance policy, I was able to pay our out-of-pocket expenses. I don't know what we would have done without the help of this policy.

Then, two years later it was my turn. I fell ill and was out of work for seven months. My Aflac short-term disability insurance policy kicked in and worry went out the door!

I was able to take care of my medical needs without the anxiety of day to day, month to month, expenses hanging over my head like an anvil.


To learn more about how voluntary short-term disability policies can benefit you or your employees, visit aflac.com/stdplan

To see how much an accident or illness can cost even if you or your employee has major medical insurance, go to aflac.com/RealCost.

Sources

  1. The Official Website of the U.S. Social Security Administration, “Social Security Basic Facts,” February 7, 2013, http://www.ssa.gov/pressoffice/basicfact.htm, accessed on February 8, 2013.
  2. CDA Council For Disability Awareness, “CDA 2010 Consumer Disability Awareness Survey,” http://www.disabilitycanhappen.org/research/consumer/page_6.asp, accessed on February 08, 2013.
  3. Social Security Administration, Fact Sheet March 18, 2011
  4. The Official Website of the U.S. Social Security Administration, Disabled worker average benefits table, http://www.ssa.gov/OACT/STATS/dib-g3.html, accessed on February 08, 2013.
  5. CDA Council For Disability Awareness, “The 2011 Council for Disability Awareness Long-Term Disability Claims Review,” http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2011.asp, accessed on February 08, 2013.

Aflac individual insurance coverage is underwritten by American Family Life Assurance Company of Columbus. Group insurance coverage is underwritten by Continental American Insurance Company (CAIC), a wholly-owned subsidiary of Aflac Incorporated. CAIC is not licensed to solicit business in New York, Guam, Puerto Rico, or the Virgin Islands. For groups sitused in California, group coverage is underwritten by Continental American Life Insurance Company. For Aflac individual insurance coverage in New York or Aflac coverage for groups sitused in New York, coverage is underwritten by American Family Life Assurance Company of New York.