Pros and Cons of Buying Short-term Disability Insurance Outside Your Workplace

Short-term disability benefits give those working in every field the peace of mind of knowing their income is secure. No one plans to get sick or hurt while they are on the job, but being prepared is better than being caught in the cold.  In the event that a chronic condition, injury, or disabling illness does strike, short-term disability insurance will provide the financial security needed to weather the storm. As beneficial as these policies may be, they also have some imperfections to keep in mind.  In this post, we will cover the advantages and disadvantages of securing short-term disability insurance outside of an employer-backed plan.

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What is Short-Term Disability Insurance?

  Disability insurance covers a person when they are unable to work due to a disability. If injury, illness, or a health condition keeps you off of the job, disability insurance will provide a monthly payout to help cover lost wages.  Long-term disability insurance will provide benefits for a year up to a lifetime. Short-term disability insurance will provide benefits for anywhere from 30 days up to one year. Short-term coverage is usually offered through a private company to either employers or to individuals. Though most employers offer group places for short-term coverage, individuals are also able to purchase their own.  Every policy is different and the best way to find out which will work for you is by researching disability insurance reviews. This will give you a good idea about the cost of premiums, customer service track record, and even on the ease of receiving payouts. 

Why Should You Get Short-Term Disability Insurance?

  Many employers offer disability insurance, however, some may not offer short-term disability insurance. Additionally, even if your place of work does offer group coverage, the plans may not be appealing. Thankfully, most employers offer disability insurance as an optional benefit, which means that employees are able to shop for policies independently.  While it is true that most people won’t be in a position where they need disability insurance, it is a smart investment in case the unavoidable occurs. According to recent polls, at least 20% of workers under 35 will experience at least one instance of disability before they retire. With those odds, it is better to be safe than sorry.  Short-term disability insurance covers injuries both on the job and off the job, which makes such a policy invaluable. Short-term disability coverage can even be used to help cover income gaps during maternity leave and even covers the recuperation period following a Covid-19 infection. 

Where Can You Get Disability Insurance?

  You can secure a short-term disability policy through your workplace if your employer offers sponsored coverage. Typically this type of coverage is either paid in full or partially during your employment. A few states also make employer-funded disability insurance mandatory.  Also, some employers offer voluntary disability insurance benefits. In this scenario, employers are able to get better rates on premiums, however, they do not cover the cost of premiums for their employees.  Many professional associations also offer group-rate disability insurance coverage that their members can purchase. Anyone who is employed also has the ability to buy an individual short-term disability insurance plan. These can be purchased directly from an insurance company or through an insurance broker. 

The Pros & Cons of Private Disability Insurance

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As with anything, there are advantages and disadvantages to purchasing a short-term disability insurance policy on your own. If you are self-employed, or if your job doesn’t offer enough coverage, purchasing an independent short-term policy is a smart move.

Pros: 

Buying a short-term disability policy outside of your place of work allows you to have a higher benefits cap than what is offered through a work-offered policy. With a private short-term disability policy, you have more control over extra features on your plan.  You can choose cost of living adjustments, and even pick an insurance company that offers the best plans for your situation. If you change jobs, your coverage goes with you instead of losing coverage along with your position. The main benefits are the convenience of coverage, and the ability to maintain the policy regardless of where you work.

Cons: 

Employer-sponsored short-term disability insurance is often easier to qualify for and is much more affordable than a private policy. In many cases, coverage is included in your employment package saving you hundreds or thousands of dollars each year.  Auto-enrollment is another feature of employer back coverage that takes the guesswork out of buying coverage. With private policies, you would need to handle the details yourself each year upon renewal.  For women, it is also important to note that private disability insurance doesn’t cover maternity leave, however, employer-backed short-term disability insurance does. The main drawbacks of not using employer-provided coverage are higher premiums and harsher qualification requirements.