Remember when you were a kid and you strapped on that superhero cape and thought you were invincible? Until, of course, you jumped off the couch and broke your arm.
As adults, we still sometimes like to imagine nothing can happen to us. In reality, the odds that we’ll get injured or really sick are pretty high. The Social Security Administration estimates that one quarter of all 20-year-olds will become temporarily or permanently disabled sometime before they retire.
If that happens to you, you can probably use some sick time and maybe a little vacation (if you have those through work) to take time off and still get paid. But if you’re out for more than the time those days will cover, typically, your paycheck will stop.
Short-term disability insurance vs. long-term disability insurance
Enter disability insurance, which will pay you a percentage of your salary if you can’t work. There are two types of disability insurance: long-term disability insurance and short-term disability insurance.
Long-term disability insurance covers you if a disability like an accident or injury keeps you out of work for many months or even years. But there’s a caveat: It doesn’t start paying right away. Often, you have to wait six months or more before you get a check. That’s where short-term disability insurance comes in. So what is short-term disability insurance? It’s insurance that typically kicks in right away and pays you income until long-term coverage begins.
How much does short-term disability pay?
Short-term disability coverage typically pays between 50 percent and 100 percent of your regular salary, depending on the plan.
When does short-term disability kick in?
Sometimes you have to use up all your sick days before coverage kicks in, but depending on your policy, it could start immediately or after a short waiting period, perhaps a couple weeks.
How does short-term disability work if I’m pregnant?
Short-term disability coverage through your employer may replace your salary while you’re off on pregnancy or maternity leave, particularly if you become too ill to work before you give birth or when you’re recovering from giving birth.
Unfortunately, this coverage doesn’t usually last the full 12 weeks that the Family Medical Leave Act gives you for maternity leave. Instead, it usually lasts around six to eight weeks. If you’re lucky, your employer might provide a family leave benefit to cover the rest of your leave.
Where do you get short-term disability insurance?
Typically, short-term disability insurance is offered through your employer. Sometimes it’s part of your standard benefits (meaning you just automatically get it), and sometimes it’s available for you to purchase as part of your benefits. Use the disability insurance calculator to see how much coverage you might need. If you can’t get it through your employer, or can’t get enough, there are options to buy it yourself, but they’re pretty limited and may not cover as much as what you get through an employer. A financial planner or professional can help you look at what’s available.
To be used with form MN 992-STD, MN 992-LTD, MN 1096 SGSTD, MN 1096 SGLTD, ICC16.TT.DI.IIB.(0916), ICC16.TT.DI.FIB.(0916), ICC16.TT.DI.CAT.(0916), ICC16.TT.NCDI.(0916), ICC16.TT.GRDI.(0916), ICC16.TT.DI.PDB.(0916), ICC16.TT.DI.PDBO.(0916) or state equivalent. Not all contracts and optional benefits are available in all states. Disability insurance policies contain some features and benefits that may not be available in all states. The ability to perform the substantial and material duties of your occupation is only one of the factors that determine eligibility for disability benefits. These policies also contain exclusions, limitations and reduction-of-benefits provisions. Eligibility for disability income insurance, additional policy benefits, and qualification for benefits, is determined on a case-by-case basis. For costs and complete details of coverage, contact your Northwestern Mutual Financial Representative. Disability insurance policies contain exclusions and limitations that could affect individual coverage. For costs and more complete details, consult a Northwestern Mutual financial representative.
Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life insurance, disability insurance, annuities, and life insurance with long-term care benefits)