Finding the best short-term disability insurance isn't a simple matter of getting a company name and buying a policy. Every short-term insurance policy is different, and you must evaluate those differences in relation to your own needs. What is best for someone else may not be best for you. Think about your goals, existing insurance coverage, income sources and bills when you're plotting the best short-term disability insurance for you.
Short-term disability insurance pays you a portion of your monthly income for a short period of time when you become disabled. Things like how much the insurance pays you, how long until you start to get benefits, how long you continue to get benefits, and any additional riders are all selections you make when you purchase a policy. The selections you make determine how much you'll have to pay for the short-term disability insurance policy.
The first step in selecting the best short-term disability insurance coverage is to evaluate your income requirements. How much do you currently make? What's the minimum you can afford to make to meet your monthly bills? Short-term disability policies typically pay you a percentage of your gross income, and the higher the percentage, the more you pay upfront in policy fees and premiums. Short-term policies typically pay from 50 to 70 percent of your gross income, although some policies pay more or less.
Wait Time and Duration of Coverage
The wait time and duration of coverage ranges greatly from policy to policy. If you get two weeks of sick time through your employer, you may want a short-term disability policy that starts two weeks from the date you become disabled. Some policies have wait times as short as a week, while others require a wait of more than a year. Duration is also something you can elect; how long should your policy continue to pay benefits? Typical duration is two or five years, and shorter durations cost less.
Some short-term disability insurers give you the option of purchasing additional riders for your policy. You may be able to purchase a rider that offers cost-of-living adjustments, which would adjust your benefits at a predetermined time to accommodate an increasing cost of living. You may also be able to purchase Social Security riders, residual benefit riders and future purchase option riders; all of which increase the price but may make your short-term insurance policy more flexible and valuable.
Many employers offer short-term and long-term insurance policies as a part of their benefits packages for employees. Before you buy a short-term insurance policy, check to see whether your employer offers any coverage. Buying your own coverage may make you ineligible for employer coverage; check policy details before buying. You may want to supplement your existing employer-offered coverage by purchasing your own short-term policy that begins when your employer policy ends, to continue getting benefits.
Be aware that under some circumstances, your short-term disability may be taxable as income. Tax circumstances vary wildly, so consult your accountant or tax preparer to determine the specifics for you. However, as a general rule, short-term disability insurance provided by your employer is taxable, while short-term insurance that you purchase for yourself is not. Your employer may withhold taxes from your employer-sponsored short-term disability for you; consult your payroll department or policy language for details.
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