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Disability insurance isn’t what you think. The main reason many Americans are underinsured is that they associate disability coverage with special needs.
But you don’t have to have special needs or be physically challenged in order to qualify for short term disability insurance. There are legal definitions for a disability that relates specifically to insurance coverage.
Check out this guide to protecting yourself and your family with short term disability coverage.
What is Disability Insurance?
There’s more than one type of disability insurance. For most Americans, disability insurance includes any short term disability coverage you receive from an employer.
Short term disability happens when you are unable to work because of an injury that happens outside of work. If you’re injured while at work, it’s considered a worker’s compensation claim.
Short term disability won’t last long. Even if your injury qualifies, expect your payout to last no more than a few months.
Most claims won’t extend beyond a year.
What Happens When You File for Short Term Disability?
Short-term disability is a relatively simple process to file for. You submit an insurance claim to your provider just as you would an auto or health insurance claim.
The major difference though is that you’re applying to receive ongoing payments. These payments represent a certain percentage of your regular income.
Some short term disability covers as much as 70 percent of your income. These payments are offered on a weekly basis.
You have to prove your disability in order for your claim to be approved. This is done through medical records offered by your physician.
The records must prove that your injury or illness prevents you from doing your job. If there’s any way you can do your job differently or simply scale back on your hours, you won’t receive disability insurance payments.
For example, if you hurt your right hand but are left-handed, your disability wouldn’t apply because you can simply use your left hand to perform tasks. This won’t apply if you require both hands to do your job.
Where to Get Disability Insurance
Disability insurance is offered by employers and independent providers. There are some states where it’s mandatory for employers to offer short-term disability insurance.
But this isn’t the most common scenario. You’ll find short term disability offers through many independent insurance providers.
You pay a monthly premium for coverage in exchange for protection in the event you’re unable to work. This is extremely important in jobs that are physical like driving trucks or construction work.
You can’t afford to become injured because it takes away your ability to physically do your job. Getting your own insurance policy protects your family from the sudden loss of income when you need time off to recover.
Look into disability insurance coverage through third-party providers and your health insurance company.
What About Long Term Disability Insurance?
Long term disability insurance coverage is fairly limited. Most Americans won’t qualify for coverage until after retirement age. At this time, they’ll receive social security disability insurance.
There are exceptions to this rule, but in general, you have to be retired and no longer receiving income from employment. You also need to qualify for social security.
Most people qualify for social security by earning a certain number of job credits throughout their lifetime. These credits are earned by the number of hours you work a job that pays social security benefits.
When you get close to retirement, these hours are converted to credits that are used to determine your eligibility. If you’re eligible for social security, disability insurance is an option but not a guarantee. It’s important to know your rights.
You must be injured or ill to the point where you won’t recover. These are long term situations where the doctor thinks you might not live or are permanently disabled.
Unlike short term disability insurance, these are situations where you’re injured or ill for more than a year. If your injury means you can never work again, consider applying for social security disability insurance.
There are exceptions made for people before retirement. You just need to prove you meet the extenuating circumstances of early coverage.
These usually involve very serious injuries or being on your death bed.
How Much Does Disability Insurance Cost?
Disability insurance is expensive not to have. You can get by with healthcare coverage early in life, but as you age you run a higher risk of becoming ill.
It’s important to provide your family with lots of options for care. These options help keep you taken care of with only a few minor lifestyle adjustments while you’re ill.
In some cases, you might not even be ill when receiving coverage. Some people take short term disability after the birth of a baby to spend more time with family.
This means your family gets to bond without interruption during the baby’s first few months of life without using your sick or vacation pay. If you use FMLA, this time goes unpaid.
Using short term disability for maternity leave is a smart way to help parents extend their time with children during the first year of life.
What Coverage is Best?
Disability insurance has its place. You won’t need to rush out and get disability coverage if you work in a state that requires it by law.
Your employer will offer coverage that takes precedent over any private coverage you receive. If you’re not in one of these states, shop around for policies that can help you remain protected in case the unexpected happens.