Whether you have all your monthly bills memorized or it's just one big, scary surprise every month, you know they can all add up pretty fast. And what if you were injured or became seriously ill and couldn't work?
Now you're not bringing any income in to pay all those nasty bills. Luckily, there's disability insurance to help replace your income when you can't work. But is it expensive? The good news is, it doesn't have to be.
In many cases, your employer provides group disability protection for a relatively small price. But if your employer doesn't offer it, you can always get the individual coverage you need through an independent insurance agent or private insurer.
There's a lot to know about all the different types of disability insurance, so why don't you start with a bit of background on group short-term disability and go from there?
What Is Group Short-Term Disability Insurance?
As was said, your employer may offer a group insurance policy where you can get short-term disability coverage when you're hired and/or during open enrollment periods. Short-term disability coverage is designed to protect you against the financial struggles that can come when you're injured or ill and can't work for a short period, up to a year.
For employers, this coverage is a perk for employees that can really help increase job satisfaction and decrease turnover rates.
These group benefits cover all eligible employees, regardless of their current health. Once issued, the language, benefits and costs of an individual disability policy are contractually guaranteed, even if you change your occupation or employment.
The biggest pro of group disability is that it's often included as part of your salary, or at least at a very reasonable low price, subsidized by your employer.
Employers might also offer voluntary group benefits, where employees are allowed to choose which type of coverage they want. This voluntary coverage may increase premiums, so employers leave this decision up to each individual.
On the downside of group disability insurance, because coverage is tied to your employment, if you lose your job or decide to change employers, the coverage is gone. Also, the cost of group coverage can change from year to year. Also, because most companies want these costs to be low, they often choose coverages that tend to have some fairly important coverage gaps.
This makes it a pretty good idea to meet with an independent insurance agent who can go through your coverage and help you decide if there are any additional individual options that might help protect you better.
Why Is Group Short-Term Disability Insurance Important?
According to the folks at the Social Security Administration, more than 25% of 20-year-olds will become physically challenged before they reach retirement. Yikes!
And while most individuals recover from their disability and eventually return to work, others may be forced to take different jobs with lower incomes--or they may never work again. These are some pretty sobering statistics, which is why a short-term-disability policy is key to any successful financial plan.
Some insurers stress long-term coverage as more important than it's short brother, since long-term coverage can fill the gaps in income replacement, healthcare, and more. But at the same time, short-term disability insurance can help fill the gap normally left for long-term disability insurance’s elimination period (the time between your disability and receiving your payouts).
Don't worry, though, an independent insurance agent can help explain it all in more detail to help you understand your options if your company doesn’t offer it.
How Much Does Group Short-Term Disability Insurance Cost?
Short-term disability insurance may be offered for free or it may cost a negligible portion of your salary. Typical private short-term disability rates cost between 1% and 3% of your gross income. So say your salary is $50,000, in that case you would pay between $500 and $1,500 per year.
Other price factors include:
- Length of the elimination period
- Length of the benefit period
- Extent of the policy’s coverage
- Additional riders
- The insurability of the individual
- Occupational risk factors
- Age of the applicant
Are There Ways To Reduce the Cost of Group Short-Term Disability Insurance?
While there are no special coupons you can use to lower your costs, some of the factors that go into your quote can be played around with. A few ways to help you lower those costs are to:
- Extend the elimination period
- Shorten the benefit period
- Shorten the policy coverage
- Skip any unnecessary riders
- Be in good health, like avoid smoking
- Work in a less dangerous work environment
- Apply for benefits at a young age
How To Buy Group Short-Term Disability Insurance
As mentioned previously, your employer will typically offer group short-term disability insurance when you're filling out your new-hire paperwork or during your annual open-enrollment period.
If your employer doesn't offer short-term disability insurance, or their coverage stinks, private insurance companies can help boost your protection and fill in any gaps. But there can be challenges when comparing various companies and making sure they meet your needs.
An independent insurance agent can help explain the fine print in clear language without the jargon. They're trained to find you the most comprehensive coverage at the lowest rates, as well as offer financial advice for your retirement, family needs, and more.
Talk to an Independent Insurance Agent about Group Short-Term Disability Insurance
When you're ready for more info, you can meet with an independent insurance agent to help determine the right coverage for your needs. Experienced and knowledgeable agents can recommend the right coverage that takes into consideration your unique situation, including:
- Do you already have an individual disability policy in place?
- Do you want to explore your short- and long-term disability coverage options?
- How quickly can you reduce expenses?
- What types of workers' compensation claims may be denied by insurers? And how likely are they to occur at your place of employment?
- Do you maintain an adequate cash reserve/rainy-day fund?
- Does your household have one or two sources of income (including passive investments, rental property, etc.)?
Compare Quotes for Disability Insurance with an Independent Insurance Agent
Your time is valuable, so why waste it by trying to go through the disability insurance process yourself? Expert independent insurance agents will help you determine what type of coverage makes the most sense for you.
Independent insurance agents stay on top of the industry and all the latest discounts so you don't have to. That means they'll help find the perfect amount of coverage at the best price.
They don't just help with the initial stage of obtaining coverage, either. If you ever become physically unable to work, they'll be there to assist you. Now that's assistance at it's finest.