Is Short-Term Disability Insurance Worth It? Unveiling the Financial Lifesaver You Never Knew You Needed

Is Short-Term Disability Insurance Worth It?

Having short-term disability insurance provided by your employer is a valuable benefit to have.

Although short-term disability insurance doesn’t provide the comprehensive protection of a long-term disability policy, it remains valuable to possess, particularly if it’s provided at no cost through your employer.

Is Short Term Disability Insurance Worth It? An image of a doctor helping a disabled man to sit on a wheelchair
An image of a doctor helping a disabled man to sit in a wheelchair. PHOTO: Freepik


What Is Short-Term Disability Insurance?

Short-term disability insurance provides partial income reimbursement during brief periods of incapacity, typically lasting three, six, or twelve months.

Payments are disbursed shortly after approval, usually within a week or two.

Distinguishing itself from workers’ compensation, short-term disability covers injuries or conditions unrelated to work, offering flexibility in fund usage.

Coverage typically ranges from 40% to 70% of one’s income, with benefit periods varying from three to six months, occasionally extending to twelve.

Employers commonly include short-term disability insurance in their benefits package, often at minimal cost to employees, making it an attractive addition to overall compensation.

  • What’s The Difference Between Short-Term and Long-Term Disability Insurance?

Short-term disability insurance offers benefits for brief durations, typically up to 12 months following the onset of disability.

Conversely, long-term disability insurance provides benefits over significantly longer periods, ranging from five or 10 years to reaching a specified age, such as 65.

When both short-term and long-term disability coverage are in place, the short-term policy initially disburses benefits during the elimination (waiting) period of the long-term policy.

The elimination period denotes the duration between the onset of disability and when the insurer commences payment of long-term disability insurance benefits.

This period within a long-term policy can vary, lasting anywhere from one month to as long as two years.

What Does Short-Term Disability Insurance Cover?

The coverage provided by short-term disability insurance varies depending on the policy, but typical reasons for filing a short-term claim include pregnancy, injuries, and mental health issues.

It’s crucial to note that short-term disability insurance typically excludes coverage for injuries or illnesses related to your job.

For such situations, other forms of coverage, such as workers’ compensation, are essential.

  • Top Reasons For Short-Term Disability Insurance Claims

Reason Percentage of claims
Pregnancy 22%
Musculoskeletal disorders 19%
Injuries like fractures and sprains 11%
Digestive disorders 7%
Mental health issues 7%
Source: Council for Disability Awareness


Short-term disability insurance policies contain exclusions that delineate situations where coverage for short-term disabilities is not provided.

These exclusions may involve injuries associated with:

  • A felony.
  • A pre-existing condition.
  • A work-related injury or illness.
  • An issue for which you’re eligible for workers’ compensation or occupational disease law.
  • Cosmetic surgery or not medically necessary surgeries.
  • Riot.
  • Suicide, attempted suicide or intentionally harming yourself.
  • War.

How Much Does Short-Term Disability Cost?

The expenses for individual short-term disability insurance can fluctuate based on factors such as age, income, profession, riders, and pre-existing conditions.

Opting for coverage through your employer is generally more advantageous.

For instance, New York Life offers an employer-sponsored short-term disability insurance policy.

Under this policy, disabled employees receive 60% of their income, up to a weekly maximum of $1,400, for 13 weeks.

The monthly cost for this policy is $1.14 per $10 of weekly benefit for individuals under 50, $1.27 per $10 of weekly benefit for those aged 50 to 59, and $1.86 per $10 of weekly benefit for individuals aged 60 to 99.

How Does Short-Term Disability Insurance Work?

By paying monthly premiums, you’ll be entitled to receive income replacement in case of temporary injury or illness preventing you from working, verified by a medical professional.

Short-term disability coverage becomes effective after a waiting period, also known as the elimination period, and continues for the duration of the benefit period, usually ranging from three to 12 months.

How Long Does Short-Term Disability Last?

Short-term disability insurance usually spans from three months to one year, contingent upon the selected policy.

However, an elimination or waiting period must be satisfied before coverage commences.

Should I Get Short-Term Disability Through Work?

Consider obtaining short-term disability insurance if it’s available through your workplace.

Your employee perks might encompass reduced-rate or complimentary short-term disability coverage.

Pros and Cons Of Short-Term Disability

 Is Short-Term Disability Insurance Worth It? An infographic outlining Pros and Cons Of Short-Term Disability
An infographic outlining the Pros and Cons Of Short-Term Disability.


  • Pros Of Short-Term Disability

  1. Provides Monthly Income When You Get Ill or Injured.
  2. Stability and peace of mind for health and recovery.
  3. An”own occupation” definition of disability (most of the time).
  • Cons Of Short-Term Disability

  1. Most plans contain exclusions and limitations.
  2. You will face a waiting period.

Is Short-Term Disability Worth It For Maternity Leave?

Short-term disability insurance offers valuable financial support during maternity leave, helping to cover the significant expenses associated with a new baby.

Every additional source of income is crucial when facing the accumulating costs of baby care.

Do You Need Short-Term and Long-Term Disability Insurance?

Yes, Having both short-term and long-term disability insurance provides comprehensive protection.

Employer-provided short-term disability insurance complements an individual long-term disability policy effectively.

Similar to short-term disability insurance, long-term disability insurance replaces your income if you’re unable to work.

However, unlike short-term disability insurance, a long-term policy can provide coverage for many years, possibly until retirement.

Typically, long-term benefits are not accessible until 90 days after becoming disabled, although this waiting period can extend up to two years.

Short-term disability insurance serves as a valuable solution to bridge this coverage gap and ensure continuous payments.

What If You Can’t Get Short-Term Disability Insurance From An Employer?

If your employer doesn’t offer short-term disability insurance, you have options to secure coverage.

You can acquire your short-term disability plan or consider critical illness or accident insurance, which provides benefits in the event of serious medical situations like heart attacks or strokes.

Alternatively, if your employer doesn’t provide short-term disability insurance, you can explore temporary disability insurance offered by your state.

Residents of California, Hawaii, New Jersey, New York, or Rhode Island can access some short-term public benefits through these programs.

Although the coverage from a temporary disability plan may be limited, such as New York’s coverage up to $170 per week, it can still be valuable depending on your circumstances.

Additionally, you can proactively prepare for emergencies by establishing an emergency fund to cover out-of-pocket expenses during periods of unemployment.

Final Thoughts

Short-term disability insurance, particularly when offered by an employer, is a valuable resource during temporary incapacity.

While it may not match long-term disability coverage, its prompt benefits and inclusion in employer packages at minimal or no cost make it worthwhile for financial planning.

Covering various conditions such as pregnancy, injuries, and mental health issues, it provides stability and peace of mind during health challenges.

Individuals without employer coverage can explore alternatives like individual plans, critical illness or accident insurance, or temporary disability programs offered by certain states for support in times of need.

Frequently Asked Questions (FAQs)

  • How much does most short-term disability pay?

Expect to allocate 1% to 3% of your income for short-term disability insurance, providing coverage for up to 60% of your monthly income.

  • Do I need short-term disability insurance in California?

California mandates that all workers contribute to its short-term disability insurance (SDI) initiative via deductions from their paychecks.

Should employees face incapacity for work due to disability, they are eligible to receive weekly benefits from the program until they are fit to return to work or until the benefits period concludes.

  • How much does short-term disability pay in Texas?

After a participant’s claim is authorized, short-term disability offers 66% of your monthly salary as benefits, which are accessible for a maximum duration of five months (equivalent to 150 days).

  • How much does short-term disability pay in NY?

$170 per week

Upon completion of a seven-calendar-day waiting period or upon depletion of your sick leave accruals (whichever is longer), you will be entitled to receive 50 percent of your average salary from the eight weeks preceding the onset of disability.

This benefit is subject to the maximum established under the New York State Disability Benefits Law, currently set at $170 per week.

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