Features

• Short-term disability policies provide coverage for different lengths of time. Generally STD policies pay insurance benefits for several weeks up to a couple of years. Before disability benefits are paid out, the insured must satisfy waiting periods that can last a couple of days to several months. However, if insureds have disabilities that are apparent such as broken bones or pregnancies, waiting periods may be waived and insurance benefits can be immediately paid.
  
  

Types of Disabilities Covered

• There are certain types of disabilities that are covered by short-term policies. Such disabilities must be temporary medical problems that keep individuals out of work for short periods of time. Some of the leading causes of short-term disability claims are cancer treatments, back injuries, diabetes and arthritis, according to the Council of Disability Awareness (CDA). For new mothers, maternity leave also qualifies as a short-term disability.
  
  

Considerations

• Short-term disability coverage can be bought as an individual policy or purchased through an employer-sponsored disability plan. Some companies provide STD coverage to their employees free of charge. However, if the premiums of short-term disability policies are paid with pre-tax dollars, insurance benefits will be taxed by the IRS. Disability benefits are received tax free by the insureds when insurance premiums are paid with after-tax dollars.
  
  

Disability Insurance Benefits

• STD policies replace a percentage of workers' income while they are out of work. Typically, STD policies pay 40-65 percent of the insureds' base salaries, according to the Life and Health Insurance Foundation for Education. Some insurers may pay up to 80 percent, according to McClaren & Associates. Insurance companies won't pay 100 percent of income as an incentive for them to get back to work.
  
  

Facts About Disabilities

• There are several statistics that individuals should consider when deciding to get STD coverage. Thirty percent of workers 20 years of age or older are likely to become disabled at some point before reaching retirement, according to the Social Security Administration. American Council of Life Insurers report that one-third of individuals aged 35-65 will be disabled for more than 90 days. Also, one of the biggest consequences is that more people lose their homes to disabilities than to fires or deaths, according to Insurance.com.