Short Term Disability Insurance Guide
How to protect my income and assess my insurance needs
How Does Short-Term Disability Work?
Short Term Disability Insurance is a type of disability insurance coverage that provides income to an employee if he or she is unable to work for a short period of time.
The benefit payout ranges depending on the insurance policy's coverage. It can range from 40 percent up to 80 percent of an individual's annual income.
How Long Is Short-Term Disability?
Short Term Disability coverage lasts typically for three to six months, with the longest option ever known being two years for a policy.
However, it is not very common to have two years available; the vast majority of short-term disability benefits are for three to six months.
To qualify for short-term disability insurance, a doctor or healthcare professional must provide a signed evaluation determining you are unable to perform your normal job duties temporarily.
There are numerous reasons a person may file a claim for short-term disability. Some of the most common include:
- Injury
- Maternity leave
- Surgery rehabilitation
Is Short-Term Disability Taxable?
Short Term Disability may be taxable, depending on how it is set up.
If your employer pays 100% of the premiums, then all of your short-term disability income is taxable. However, if you pay the insurance premiums, then it would not be taxable.
In some situations, there is a hybrid of the two. Any premium portion your employer, percent-wise, would be taxable.
For example, if you split the insurance premiums 50%, then the 50% you are paying would be taxable.
How Much is Short-Term Disability Insurance?
Unfortunately, this is one of those questions where it depends. Short Term Disability Insurance's cost takes into consideration:
- Sex
- Age
- Health
- Occupation
- Policy coverage
Depending on how you answer these questions, can impact your disability premiums. If you want a higher benefit or coverage, you are going to have to pay more.
Just like, if you are at a higher risk of needing insurance, you'll likely be paying more. On average, people pay 1% to 3% of their gross income each year.
For example, if you make $100,000 a year, you would possibly pay between $1,000 - $3,000 a year or $83.33 - $250.00 a month.
It really depends on the above criteria listed, what you are looking for, and your overall health.
Can You Buy Short-Term Disability Insurance?
Yes! Of course, you can, but before you jump into purchasing it, you should consider:
- Do you need more insurance coverage?
- Are you already covered by your employer?
- If you do need more coverage, how much will you need?
Do I Need Short-Term Disability Insurance?
Not everyone needs short-term disability insurance. Just like all types of insurance, it depends on your specific situation. Rather here are two questions to help determine if disability insurance is worth having a conversation about:
- Are you the sole provider for your family?
- If you lost your income, would you be in financial trouble?
Unfortunately, having disability insurance as a benefit is more helpful than you may want to realize. In the best scenario, we do not buy the insurance and never need it.
In the worst-case scenario, we do not buy it and we struggle financially.
According to the Social Security Administration, it estimates that one in four individuals (20 years and older) will be disabled before they reach age 67.
This is a much higher probability for us or someone we know than we would have thought.
If you are interested in disability insurance, the first step would be to talk with your employer. The organization may already provide the benefit at a very affordable rate.
According to the Bureau of Labor Statistics 40 percent of civilian workers had short-term disability insurance available in 2020, while long-term disability insurance was available to 35 percent.
Talk with your Human Resources department to review your employer-offered benefits. If you are not sure if they provide you with the coverage you need, you can always talk with a financial advisor to discuss the plan specifics.
Short Term Disability Insurance Agent
Working with a local short-term disability Insurance Agent is an important decision that can impact not only your future but your family.
When deciding what insurance agent to work with, be sure the company is an independent agency that does not require specific quotas or products for their advisors to sell or meet.
You want an advisor that can understand your needs and find a product that meets your requirements. Rather than encourage a suboptimal product because they have to meet a quota or have a limited selection available to offer.
When it comes to insurance, there is no one product that fits all. Each person's case should be discussed to understand:
- What is your financial situation?
- What are your insurance goals?
- What are your obstacles?
- What plan aligns best to overcome your obstacles and achieve your goals?
Talk to Langan Financial Group's disability agents to help assess your needs. We are more than happy to review current policies, discuss your concerns, and answer any questions you may have about disability insurance.
Schedule a Chat with a Group Disability Insurance Agent
Langan Financial Group's insurance agents have over 100 years of experience servicing insurance policies for individuals and families.
Give us a call at 717-288-1880 to see how our local agents can help with your insurance policy needs. Or visit our disability agent contact page to fill out an inquiry.
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Phone: 717-288-1880
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