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.
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 and short-term. 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 will 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.
Just because you’re sick and can’t work doesn’t mean your bills disappear.
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. 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.