Voluntary Short Term Disability Cost

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Voluntary short term disability insurance cost

Not to start on a negative note, but according to the Council for Disability Awareness, 25% of American workers face an injury or illness in their lifetime that leaves them unable to work either temporarily or permanently. That's one in every four if you're not a fan of percentages. 

And here's another: Only 48% of American adults have enough savings to cover three months of living expenses if they’re not earning any income. So how are you supposed to protect yourself in case the unthinkable happens and you can't work due to an injury or illness?

That's where voluntary short-term disability insurance (STDI) comes in to help replace your lost income. And as with any decision that affects your financial future, it pays to seek out the advice of an expert like an independent insurance agent

STDI policies can be complicated to shop for and purchase, especially when comparing the fine print to figure out what’s covered and what’s not. An independent insurance agent understands this challenge and can help guide you through the process of selecting the best voluntary STDI policy. But first, here's a bit of background to give you a better understanding of it all.

What Is Short-Term Disability Insurance?

Simply put, short-term disability insurance is coverage that replaces your income for a short period if you are injured or become ill and can't work. Since this is only short-term disability coverage, the benefit period usually lasts three to six months, though this may not cover you for the entire duration of your disability. 

Depending on the terms and conditions of your insurance policy, STDI typically replaces 80% of your gross income for the three to six month duration until a long-term disability policy kicks in.

While most people will need a long-term disability insurance policy, short-term insurance can help protect you before longer coverage kicks in. More than three-quarters of employers in the United States offer some form of disability insurance to their employees. But there’s a catch: 

Employees are usually only given the option to get STDI on a voluntary basis, where the “voluntary” portion of STDI is when they’re signing up for employee benefits. 

What Is Considered a Disability by Insurers?

Of course, understanding what a “disability” is can help clarify what STDI coverage is for: 

A disability is any medical condition that prevents you from working. One common misconception is that a disability only occurs because of a workplace accident. But most disabilities are caused by chronic conditions like heart disease, back injuries, and cancer. 

And depending on your employer, pregnancy can also be categorized as a disability, since you may need a short-term disability policy to provide income while you’re on leave from work.

How Much Does Voluntary STDI Cost?

It depends. Short-term disability insurance can cost anywhere from $0 to more than makes sense. Insurance agents often set an expectation that the typical person pays an hour’s worth of their wages per week to cover their paycheck in the event of disability. That being said, STDI costs between 1% and 3% of your gross income on average.

So basically, the cost of STDI is based on your current income. If your income increases or decreases, so will your monthly premium cost. It also matters where you get it from, since some employers cover the entire cost to make the job more appealing. 

Others may ask that you make small contributions voluntarily in order to participate in the plan — hence the name "voluntary short-term disability insurance.” You can also get STDI through a private insurer where the cost is usually $50 to $150 more than it would be through your employer’s offerings. 

Depending on how much coverage you need and for how long, STDI typically costs as much as long-term disability, even though STDI offers a shorter coverage period.

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What Choices Affect the Cost of Voluntary Short-Term Disability Insurance?

Now that you understand how voluntary STDI is generally priced, it's important to know some of the bigger factors that go into your premium cost. Namely, which features you volunteer to include in the policy upon applying for coverage. The three major feature choices are:

Benefit period

This defines how long the plan will make claim payments during the time you can't work because of a medical condition covered by the policy. Of course, the longer the claim's payments last, the higher your premiums will be. 

Applicants can choose between several benefit period options at the time of application, which are normally for 3 months, 6 months, 12 months, and 24 months. 

Elimination period

This defines how quickly claim payments begin after a covered loss. Applicants can choose between multiple elimination period options when applying for coverage, but just know that in the insurer’s mind, shorter elimination periods generate more claims. Thus, longer elimination periods have more affordable premiums.

Monthly benefit

This defines how much the plan pays in the event of a covered loss. You choose the monthly benefit amount at the time of a new policy application. Insurance companies allow applicants to cover up to the lesser of two figures:

  • Percentage of income (typical coverage: 70% maximum)
  • Hard dollar cap (typical coverage: $6,500 per month limit) 

As with the benefit period, elimination period, and monthly benefit, you can opt for less coverage than the full amount in order to make the premiums more affordable. 

Also Affecting Cost: Applicant Risk Factors

The risk factors of the applicant also play a major role in the cost of short-term disability premiums. Because each applicant presents unique probabilities of filing a future claim, insurance companies adjust their rates based on the following risk factors:

Occupation/industry of employment

The type of work you perform on a daily basis directly influences the likelihood of filing a future claim with the insurer, so naturally, it affects the rate you pay. 

As an example, a person working in a physically demanding job or one that has a higher percentage of workplace accidents is more likely to stop working and file a claim because of a broken bone vs. someone who works in a bubble-wrap store.


As you age, your susceptibility to injury increases and impacts the chances of a future claim. Therefore, your age at the time of applying for voluntary short-term disability insurance is taken into account by insurance companies to determine your rate. 

Considering that older individuals are more likely to contract a serious illness that prevents them from working than their younger counterparts, age is factored heavily into the cost of voluntary short-term disability insurance. 


It’s a fact that smokers are more likely to contract cancer or lung disease that hinders their ability to work. Therefore, your tobacco use influences the probability of a future claim and the rates you must pay. And because vaping contains nicotine, insurers also consider this to be a risk factor for long-term health. 

Ways to Reduce the Cost of Short-Term Disability Insurance

  • Through employers' programs: Short-term disability insurance is often best through your employer, because it's typically free or for a low cost. Just know, with your employer, you only get one choice. With an independent insurance agent, you can shop multiple carriers at once to find the coverage and price that's right for you.
  • Reduced coverage: Reducing the policy’s benefits coverage, extending the elimination period, and shortening the benefit period can help reduce your STDI premiums. 
  • Purchase a policy earlier: The younger you are when you purchase an STDI policy, the more likely it is that your premiums will be lower than if you purchase it in later years. 

How to Buy STDI Coverage

The best way to get STDI is through your employer. You may need to talk to your human resources department for more information on your company's coverage plans. If that is not available, there are insurance companies that offer STDI to individuals. An independent agent can help you find the right coverage.

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Our independent agents shop around to find you the best coverage.

What's So Great about Independent Insurance Agents?

Are you’re ready to protect your family and finances when the worst-case scenario becomes a reality? If so, an independent insurance agent can help prepare you with their expert advice and knowledge to find the best coverage available. Your agent will guide you through all the fine print and provide you with a no-nonsense comparison between insurers. 

And if you should ever need to file a claim after some unexpected injury or illness, your independent insurance agent will be right there to help walk you through every step and get you set up with your payments. Pretty great, huh?

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