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Q&A: Should I sign up for my employer’s short-term disability insurance?

Are you trying to decide if you should opt in to the short-term disability insurance offered by your employer? Although it’s a commonly offered benefit, many people don’t really understand what short-term disability insurance is or if it’s something they actually need. Check out our Q&A to learn about the basics of this product so you can make an informed decision!

Q: What is short-term disability insurance?

A: Short-term disability insurance replaces a percentage of your gross income for a short period of time if you experience a disability. The percentage of income replaced and period of time vary depending on the product chosen by your employer. For example, a typical policy may replace 60% of your gross income for three to six months. Many employers offer short-term disability insurance to employees for free or at a subsidized (meaning they pay a portion of your premiums) rate.

Q: What is a short-term disability?

A: You may believe a disability won’t ever happen to you, but it’s much more common than you think. The word “disability” isn’t just reserved for catastrophic health issues. To qualify for short-term disability benefits, a medical professional must deem you unable to do your job for several weeks to months. Surgery rehabilitation, illness, injury or pregnancy are all common causes for short-term disability.

Check out these statistics from the Council for Disability Awareness1 to get an idea of how common short-term disabilities are:

  • Each year around 5% of working Americans will experience a short-term disability due to illness, injury or pregnancy.
  • The most common reasons for short-term disability claims are: pregnancies (22.3%), musculoskeletal disorders (18.5%), injuries (11.4%), digestive disorders (7.4%), and mental health issues (7.3%).

Q: But what about workers’ compensation? Won’t that cover me?

A: Maybe…but unlikely. Workers’ compensation is insurance that provides cash benefits and/or medical care for workers who are injured or become ill as a direct result of their job. Each year, less than 1% of American workers miss work because of an occupational illness or injury.1 You are much more likely to file a claim for short-term disability insurance than be paid through workers’ compensation.

Q: Is it actually a big deal to be away from work for a couple weeks or months?

A: That depends on your family’s financial situation. You may be able to go without pay for a couple weeks and be fine, but could your family make ends meet if you missed up to six months of work? What if you had significant medical bills on top of having no income?

The majority of families aren’t prepared to weather such a financial storm. Only 40% of U.S. households have enough liquid savings to cover at least three months of their recurring expenses, and only 28% can cover at least six months. One study found that 77.8% of debtors cited income loss as a contributor to their bankruptcy. This included 44.3% specifically citing medically-related work loss as a contributor.1

Q: So, should I opt in to my employer’s short-term disability insurance?

As mentioned above, many employers offer short-term disability insurance to employees for free. You should definitely opt in to this coverage! Some employers offer coverage at a subsidized rate, which means they cover a portion of your premiums and you pay the rest. Premiums are often very affordable, costing just dollars a paycheck. For many families, the income protection of short-term disability insurance is worth this small cost!

Q: I still have questions. What do I do?

A: Our agents are here to provide benefits education and support and we’re happy to help! Get in touch with the agent who’s running your company enrollment to set up a meeting. Call us now at (800) 458-9156 or fill out this form and a representative will call you.

1Council for Disability Awareness, Disability statistics, https://disabilitycanhappen.org/disability-statistic/, September 2021.