Here’s the Skinny on Short-Term Disability Insurance.

What You Need to Know to Prepare for the Unexpected.

According to a new survey, the average American worker finds so much joy from their job, they would work for free — without collecting a paycheck. Read that again.

If you think that statistic is utter nonsense…you are correct.

The truth is, the majority of people work because they must have the means to pay their bills. They have rent/mortgage payments, car loans, phone bills, monthly utilities, and groceries. And of course, Netflix…and Prime…and Hulu…and all the monthly subscription services they often forget about.

Many Americans live paycheck to paycheck. Even a minor unforeseen expense can be detrimental.

Around 36 percent of Americans would struggle to cover an unexpected expense of $400.(1)

If you were unable to work, would you be able to pay your bills? If so…how long? Do you have enough savings to support your lifestyle…or at least have enough money to pay for groceries and rent for a few months?

On average, 5.6 percent of working Americans will experience a short-term disability (six months or less) due to illness, injury, or pregnancy every year.

What would happen if you became sick and unable to work for several weeks?

If you would struggle without a paycheck…don’t panic! Many employers offer a group Short-Term Disability insurance policy that will help.

What exactly is Short-Term Disability insurance?

A Short-Term Disability policy will pay you directly if you are unable to work for a limited amount of time due to an injury or illness. Important to note…it must be a non-work-related accident or illness. A work-related injury is covered by a separate type of insurance called Worker’s Compensation. No double-dipping.

What is considered a “Short-Term Disability”?

Policies pay if an employee suffers from a prolonged illness or needs time to recover from an accident or surgery. Most policies will also pay maternity benefits, to allow the mother to recover from that sort of life-changing event. Policies usually pay out either six or eight weeks for maternity.

A licensed medical professional must deem an employee is unable to perform their normal job duties for a temporary amount of time. Paperwork and medical records are required to support the need for a claim.

With that said, benefits are not paid if you are unable to work for a couple of days due to minor ailments like an upset stomach or the flu. Your employer probably provides some PTO days you can use for those minor illnesses.

Will a policy completely replace my lost income?

Some policies will pay 100% of your pre-disability earnings. However, most policies have a lower threshold. It is common for policies to pay somewhere between 50–70% of your pre-disability earnings.

When will I receive my paid benefits?

Some policies will pay benefits the first day of a disability while others include an “elimination period” — a set amount of time that you must be off work before the plan will start to pay benefits. It is common for a policy to have a 7 day or 14 day elimination period. Employees may opt to use some of their PTO days during this period.

How long will can I collect benefits?

Most policies will pay benefits for either three or six months; as long as you are still disabled and unable to perform your prior job duties. Most people can return to work before the timeframe expires. If you are still unable to go back to work by the end of the coverage period, you may qualify for Long-Term Disability benefits.

What’s the catch?

Some policies include something called a pre-existing condition clause. The policy may not pay out benefits for a specific condition that you have been diagnosed/treated for until you have been on the policy for at least a full year. This deters people from only securing coverage when they actually need the benefit. Akin to calling an insurance agent for homeowners insurance after the basement floods. As with any insurance policy, certain limitations and exclusions will apply.

How do I get a Short-Term Disability policy?

You may already have one! Some employers provide and pay for Short-Term Disability coverage for their full-time employees. So, the first step is to ask your HR department. And be sure to thank them if they do already provide the coverage.

If your company does not currently offer a short-term disability policy, put a note in the suggestion box! Ask if they can offer the benefit in the future.

Employers can choose to offer a plan on a voluntary basis. This would allow employees the option to elect coverage and pay the premiums via payroll deductions.

If an employer-sponsored disability plan is not an option, you could get an individual policy with help from an insurance agent.

If there is something to be said for living through the past couple of years, it’s to expect the unexpected. Now you are armed with the knowledge of one option to help subsidize your paycheck in the event of an unexpected accident or temporary illness.