Can You Buy Your Own Short Term Disability Insurance?

Short-term disability insurance provides income protection when an individual is temporarily unable to work due to a non-work-related illness or injury. This insurance replaces a portion of your earnings, helping to maintain financial stability. Individuals can purchase their own short-term disability policies to mitigate the financial impact of unexpected health events.

Purchasing Individual Short-Term Disability Insurance

Acquiring an individual short-term disability insurance policy involves exploring various channels. Many begin by contacting independent insurance agents or brokers, who compare policies from multiple companies. Direct purchases from insurance companies are also common, available through their websites or phone lines.

While employer-sponsored group plans exist, an individual policy offers greater control and portability, remaining with you even if you change jobs. Some professional associations or groups may offer access to short-term disability insurance as a member benefit, potentially providing more favorable rates.

Key Elements of a Short-Term Disability Policy

Understanding the core components of a short-term disability policy is important for selecting appropriate coverage. The definition of disability specifies the conditions under which benefits are paid. For short-term policies, this often refers to an “own occupation” definition, meaning you are disabled if you cannot perform your specific job duties.

The elimination period, or waiting period, is the time between your disability’s onset and when benefit payments begin. Common periods range from 7 to 30 days, with 14 days being typical. During this time, you rely on other resources. A shorter elimination period generally results in higher premiums.

The benefit period defines the maximum length of time for which benefits are paid, typically 3 to 12 months. This differs from long-term disability, which covers longer durations. The benefit amount is usually 50% to 70% of your pre-disability income, though it can vary. Policies often have maximum weekly or monthly payout limits.

Exclusions specify situations or conditions not covered. Common exclusions include pre-existing conditions, self-inflicted injuries, and disabilities from illegal activities or acts of war. Substance abuse and cosmetic procedures not medically necessary are also excluded. Some policies may have limitations or waiting periods for conditions like pregnancy.

Applying for Coverage

Once a suitable short-term disability insurer has been identified, the application process involves providing detailed personal and financial information. Applicants typically need to furnish personal details such as their name, address, and date of birth to initiate the process. Information about their occupation, including specific job duties and industry, is also required as it influences risk assessment.

Income verification is an important part of the application, often requiring submission of tax returns, pay stubs, or other financial documentation to determine the appropriate benefit amount. A comprehensive medical history is also necessary, detailing past medical conditions, current health status, and any medications being taken. This may involve authorizing the insurer to obtain medical records from healthcare providers.

The underwriting process follows the submission of the application and supporting documents. This process assesses the risk associated with insuring the applicant. Underwriting may involve a review of medical records, and in some cases, a medical examination. Background checks might also be conducted to verify information provided in the application.

Submitting a Claim

When a disability occurs, notify the insurance company promptly, adhering to their guidelines. The policyholder must complete specific claim forms.

Supporting documentation is essential to validate the claim. This includes a detailed physician’s statement outlining diagnosis, treatment, and expected recovery. Medical records, such as test results and treatment notes, are also necessary to demonstrate the disability’s nature and severity.

Employer information, including employment confirmation and pay stubs, helps verify income. The insurance company reviews the claim and documentation, which may involve internal medical reviews or independent medical examinations. Once approved, benefits are paid directly to the policyholder, often weekly or bi-weekly, for the benefit period.