What does short-term disability insurance cover?

Disability insurance is a type of coverage that provides you with benefit payments when you cannot work due to an illness or injury not covered under other types of insurance, such as workers’ compensation. For example, if you suffer injuries that prevent you from working in a car accident on the weekend, workers’ compensation would not cover that, but your disability insurance would.

You generally have two options for disability insurance: short or long-term. Long-term policies will provide you payments for injuries or illnesses that take months or years from which to recover. However, the issue with such policies is that there is usually a waiting period for the payment of benefits that can be as long as three months. In the meantime, you need income. You can get that from short-term disability insurance.

The details

According to Business Insider, short-term disability will pay out quickly, but you will typically only get benefits for up to six months. At that time, though, your long-term disability will kick in.

Another detail worth noting is that many employers offer short-term disability as a low-cost or free benefit. It will pay up to 66% of your lost wages, which is a fair amount considering other programs pay much less. Even long-term policies will typically only pay up to 60% of wages lost.

Buying private

If your employer does not offer this coverage, you may be able to buy it through a private insurer. You should consider getting it if you have concerns about not being able to pay your bills and other expenses if you do not receive regular income for three months.