Short-Term Disability Insurance: What is it and how may it help?

Are you prepared financially if an event prevents you from earning a consistent paycheck? For instance, what if an injury or illness left you temporarily disabled and unable to work? What if a pregnancy is in your future? Did you know short-term disability insurance (STD) covers both uncomplicated pregnancy and any complications of pregnancy? According to the Council for Disability Awareness, approximately 5% of working Americans experience a short-term disability each year. 1 STD insurance may help replace lost income when the unforeseen impacts you and your family's livelihood.

What is short-term disability insurance?

Short-term disability insurance may replace all or a percentage of your income when you’re temporarily unable to work due to a non-work-related illness, injury, or medical condition. The benefit is paid directly to you, so you decide how best to allocate these funds. This can help cover everyday living expenses — such as rent, mortgage payments, and groceries — while you’re momentarily absent from work.

How does short-term disability insurance work?

Short-term disability insurance may be offered by an employer as part of their employee benefits package. If your employer doesn’t offer this benefit, you can purchase a policydirectly through an insurance provider. 2 Similar to other types of insurance, you typically pay a monthly premium for coverage. If you get short-term disability insurance as part of your work benefits, your employer might pay for the full cost of premiums, you may share the costs and have the payments deducted from your paycheck, or you may be responsible for the entire premium. If you have a qualifying disability and your short-term disability insurance provider approves your claim, your weekly payouts are sent directly to you to use as you see fit. Benefits will vary by provider and policy, but the weekly benefit will generally range from 40% to 70% of your pre-disability earnings and last around nine weeks to 6 months. 2 Keep in mind that benefit amounts and duration of coverage can vary. Review the plan details of your policy to learn the specifics around coverage. If you received other types of aid, such as from a state-mandated disability or paid medical leave benefit, the payment you receive from your short-term disability insurance may be offset by it. So your payments from your policy may be less than the full amount.