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Is Short-Term Disability Worth It?

Illness and injury can happen to anyone unexpectedly. Unfortunately, getting sick or hurt may also put you out of work for a little while, disrupting your income and creating financial stress.

Short-term disability insurance helps fill that income gap so you can recover from your illness or injury with minimal interruption to your financial stability. Not only can this reduce your need to rely on savings or go into debt, but it reduces stress, which could potentially help you recover and get back to work more quickly. This article will explain how short-term disability insurance works, what it covers, and some scenarios where short-term disability insurance may be worth it.

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How short-term disability works

Short-term disability insurance provides a temporary income stream if you can’t work due to a covered illness or injury. These generally cost 1 to 3% of your annual salary.1 To receive benefits, you’ll need to file a claim. If approved, there is generally a waiting period of seven to 30 days.2

Many employers offer short-term disability insurance through employee benefits packages, covering at least part of the cost. However, you can also purchase policies outside of the workplace independently.

Typically, short-term disability insurance policies pay a fixed percentage of your income over a defined timeframe of no longer than one year.3 The percentage you receive is influenced by many factors, such as the insurer, type of coverage purchased, and local laws. Also, short-term disability benefits may be taxable in some instances. For example, if premiums are paid with pretax dollars, benefits may be taxable.4

Aflac offers short-term disability insurance that you may be able to get through your employer. That means you could get a lower rate. Plus, guaranteed issue policies are available if you want to skip the medical exam.

What does short-term disability cover?

Short-term disability can help cover an array of illnesses and injuries that prevent you from working. It’s important to carefully read plan documents to understand what circumstances are covered, how long each is covered, and how much of your income the plan can replace.

Short-term vs. long-term disability insurance

Short-term and long-term disability insurance both help you replace income if an unexpected injury or illness prevents you from working. Each plan costs 1 to 3% of your annual salary and has no deductible or minimum spending threshold.2 However, several differences suit each to different policyholders:

  • Coverage length: Short-term disability benefits rarely last longer than a year and are often shorter. A long-term disability insurance plan can provide benefits for a longer period. Many plans provide coverage for at least 36 months, but some can pay benefits for up to a decade or even the rest of a policyholder’s life.6
  • Coverage amount: Short-term disability insurance may not last as long, but it often helps cover a larger percentage of your income than long-term disability insurance.
  • Waiting period: Short-term disability insurance waiting periods last seven to 30 days, with an average of 14 days. Long-term disability insurance waiting periods can last 30 days to two years, although many have 90-day waiting periods.2

When short-term disability insurance may be worth it

Short-term disability insurance generally doesn’t replace your entire income. However, it can help many kinds of people gain financial security and peace of mind. Here are some situations where a short-term disability insurance policy may be worth the investment:

You’re the primary wage earner

If your loved ones depend primarily on your income, short-term disability insurance can help protect them if you become unable to work. You will still receive a regular income stream you can use to help cover any necessary expenses while you recover before returning to work.

You’re self-employed

Self-employed individuals don’t have employer-sponsored benefits, such as paid time off or maternity leave. This means that taking time off can result in a loss of income. Short-term disability insurance can help provide them with a layer of protection if they become ill or injured. They can receive an income stream until they are ready to return to their business.

You don’t have a big emergency fund

Emergency funds can be excellent ways to maintain financial stability in case of a major accident, job loss, or similar event. However, it can take a long time to build one. Short-term disability insurance can give you added financial security in case you are injured and don’t have enough savings to rely on. Even if you have a sufficient emergency fund, short-term disability insurance can help reduce your reliance on your savings, creating an extra safety net.

Get short-term disability from Aflac

Short-term disability insurance can drastically reduce the financial strain of temporarily being unable to work, and it tends to be quite affordable. This makes this policy an especially good option for families with one primary wage earner, self-employed people, and households with smaller emergency funds. However, short-term disability can be a valuable asset for almost anyone wanting a safety net if they become ill or injured for a few weeks to a few months.

Ask your employer if they offer Aflac short-term disability insurance and apply immediately to give yourself extra financial security. You can also speak with an agent today if you have more questions.

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