Best Short Term Disability Insurance

Benzinga Money is a reader-supported publication. We may earn a commission when you click on links in this article. Learn more.

The Social Security Administration estimates that 1 out of every 4 of today’s 23-year-olds will be disabled for at least 1 year during their working life. Are you and your family prepared? Here’s everything you need to know about short-term disability insurance. 

Get Short Term Disability Insurance
Tip: compare 2-3 companies

The Best Short Term Disability Insurance:

What Is Short-Term Disability Insurance? 

Short-term disability insurance is a contract between you and an insurance company. You pay a premium on a monthly, quarterly or annual basis. In exchange, the insurance company agrees to pay you a percentage of your salary if you become unable to work due to an illness or injury. 

As the name indicates, short-term policies don’t last for very long. Short-term disability policies often provide benefits for 3–6 months. Many people get short-term disability insurance through their employers. If your employer doesn’t offer the coverage or if you’d like more benefits, you may want to purchase a policy. 

Why Is Short-Term Disability Insurance Important?

Short-term disability insurance is important. It helps protect your family just as much as affordable health insurance does. If you experience an extended illness or an injury with a long recovery time, your sick leave might not last long enough. If you’re self-employed, you might not have sick leave at all. Even though short-term disability insurance doesn’t last long, the benefits can help keep your bills paid. Most importantly, having the coverage can give you peace of mind. 

What Conditions Lead to Disability Claims?

Several conditions lead people to file short-term disability claims. According to the Council for Disability Awareness, the most frequent reasons for filing a claim are:

  • Pregnancy
  • Musculoskeletal disorders
  • Digestive disorders
  • Mental health conditions
  • Injuries like fractures, strains and sprains

All of these are common conditions, which are why it’s essential to have disability insurance. 

What About Workers’ Compensation and Social Security?

Many people assume that workers’ compensation or Social Security pays benefits if they become disabled. They think about how to get health insurance, but they may not prioritize getting disability coverage. The reality is that workers’ compensation only covers illnesses and injuries directly related to your work. Only a small percentage of workers miss work due to work-related illnesses or injuries. 

Social Security disability provides help to those who meet its definition of disability. To qualify for Social Security disability, you must:

  • Be unable to do the work you did before
  • Be unable to adjust to other work
  • Have a disability that your health care providers expect to last at least 1 year

Social Security only approves about ⅓ of the disability applications it receives. It also takes months to find out whether Social Security has approved your claim. Short-term disability benefits are approved relatively quickly. 

Average Cost of Short-Term Disability Insurance

Short-term health insurance companies base your benefits on your income. The more income you have, the higher your benefits need to be. This means your premiums will be more expensive. Short-term disability insurance costs about 1%–3% of your annual income per year.  

Several other factors also impact your short-term disability premiums. These include:

  • The benefit period: This is how long your benefits will last. A policy with 6 months of benefits will cost more than a policy with 3 months of benefits. 
  • The elimination period: This is the amount of time you have to wait before you can start receiving benefits. A longer elimination period means a lower premium. It also means you have to cover more of your expenses out of pocket before your benefits begin.
  • Your age: Insurance companies charge higher premiums for older people. This is because the older someone is, the more likely that person is to become disabled. 
  • Your occupation: Insurance companies also consider how physical your work is. A high-risk occupation means a higher likelihood of becoming disabled. 

Insurance companies don’t usually offer discounts on short-term disability policies. The best way to save money on a policy is to get it through your employer, but that’s not an option for everyone.  

What Does Short-Term Disability Insurance Cover?

Short-term disability policies pay benefits if you become disabled. What that means and how much a policy pays varies depending on the policy. Disability policies typically pay a percentage of your income. Most policies pay 60%–70% of your gross income. The benefits generally are not taxable if you buy the policy yourself. 

Insurance companies pay a benefit when you become disabled, but each company has its own definition of disability. Some pay benefits if you can’t perform your current occupation. Some may only pay if you can’t perform any suitable occupation. Review the definition of policies you’re considering carefully. 

What Does Short-Term Disability Insurance Not Cover? 

Short-term disability policies are different from health insurance policies. Health insurance policies cover some services and not others. With a short-term policy, if you meet the policy’s definition of disability, you typically receive the monthly benefit. Many policies have exclusions, though. You might not receive benefits in the following situations:

  • Your disability started before you took out the policy.
  • Your disability is due to serving in the armed forces.
  • Your disability is due to war. 
  • Your disability is due to a self-inflicted injury. 
  • Your disability occurred while committing a felony. 
  • Your disability occurred while intoxicated. 
  • Your disability is due to a mental health condition. 

Each policy is different, so it’s essential to review your policy exclusions carefully. Policies may also pay less (or not at all) if you receive benefits from other insurance coverage. For example, if your disability is due to an injury or illness covered by workers’ comp, and you receive a monthly benefit, your policy may not pay the full amount. It might only pay the difference between your workers’ comp policy and your short-term disability policy benefits. 

Best Short-Term Disability Insurance Providers

Looking for the best short-term disability policy is similar to finding the best health insurance. You should talk to multiple companies and review each quote carefully. Here are the 5 best short-term disability insurance companies based on our research:

1. Best Overall: Mutual of Omaha

When it comes to disability insurance, you want to work with a trusted company. Mutual of Omaha has been in business for over 100 years. AM Best rated Mutual of Omaha A+. It also has an A+ rating from the Better Business Bureau.

Mutual of Omaha offers a range of benefit options. You can choose a benefit period of up to 2 years. Your premium is guaranteed never to change due to age. It pays a full or partial disability benefit. 

2. Most Affordable: Aflac

Aflac offers affordable short-term disability coverage. Aflac offers this product through employers, so if you have another Aflac policy through work, ask about its short-term coverage. It has 0-day and 7-day elimination period options. This means you don’t have to wait long to get your benefits.

You pay your premiums through payroll deduction, which means you don’t have to write a check every month. Aflac’s policy is renewable up to age 75. 

3. Best for In-Person Service: State Farm

State Farm sells its policies through agents. Agents can be a great asset. A knowledgeable agent can help you decide on the right policy for your family. An agent can also help with the claims process, which is critical for a disability policy.

State Farm’s short-term disability policy has a benefit period of up to 3 years. It pays a benefit of up to $3,000 depending on your income and occupation. 

4. Best for Own Occupation: Assurity

Some disability policies only pay benefits if you can’t work in any suitable occupation. Assurity offers “own occupation” coverage, which means it pays benefits if you can’t work in your occupation due to a disability. If you can’t work in your regular job, but you could work in another one, you can still receive benefits for up to 2 years.

It also pays partial benefits if you can return to work part-time. You can tailor your benefits to your budget. Assurity has been in business for almost 130 years, which shows stability. 

5. Best for Self-Employed: LifePreserve

LifePreserve offers a unique combination of services to individuals, including the self-employed. You can choose between its Income Wellness Plan and its Income Protection Plan. The Income Wellness Plan offers financial counseling and pre-disability planning. The Income Protection Plan includes financial counseling and planning.

It also offers short-term disability insurance. It provides up to $2,000 per month in benefits. Its policy is renewable up to age 65. Its insurance policy has a 14-day waiting period and 6 months of benefits. You can apply for a policy online. 

Is Short-Term Disability Insurance Right for You? 

Do you need a short-term disability policy? That depends. If you have a policy through work, or if your state offers short term disability coverage, you might not need one. If your employer doesn’t offer coverage, or if the coverage is limited, you may want to buy a policy of your own. You may want to combine a short-term disability policy with a long-term disability policy to ensure you have all the coverage you need. A short-term policy on its own, however, can be an enormous help.

Frequently Asked Questions

1) Q: Is health insurance required?

1
1) Q: Is health insurance required?
asked
1

The federal mandate that required health insurance has been lifted but some states have enacted state-level mandates that require residents to have health insurance. Even where not required, health insurance can protect your family against catastrophic healthcare costs and help make routine medical expenses more predictable. Get your most affordable quote through our top providers today.

answered

2) Q: What does health insurance cover?

1
2) Q: What does health insurance cover?
asked
1

Most health insurance plans provide the 10 essential health benefits that were part of Obamacare requirements. Coverages include preventative and wellness services, prescription drug coverage, emergency services, ambulatory services, lab services, pediatric services, and more. Many plans cover a wider range of healthcare expenses but may cost more than basic plans or may have higher out-of-pocket costs for some services.Get a custom health insurance quote to cover you and your family today.

answered

3) Q: How can I save money on health insurance?

1
3) Q: How can I save money on health insurance?
asked
1

For healthcare plans that comply with the Affordable Care Act, only a handful of rating factors affect your premium. These include age and location, at least one of which can’t be changed. Smokers will pay more in most cases and your choice of plan level can affect premiums as well. Choosing a high deductible health insurance plan can reduce the cost of premiums. These plans can be combined with a health savings account to take advantage of tax-free savings for healthcare expenses. Get the cheapest health insurance premium from top providers.

answered