It goes without saying that if you become injured or ill, your ability to work is greatly reduced. Even if you are still able to work there is a slight possibility that you might not be able to work full-time. Just holding down a job might seem like enough, but it might not be for some individuals. This is especially true for sole providers. If you are like most people, you’ve already recently experienced some hardship due to the COVID setback. You’d think that this would have been enough of an eye opener for people to get the finances on track, but unfortunately, that wasn’t the case. Some people just don’t have the means, while others are not even sure where to begin.
Whatever the situation is, short-term disability is one of the best starting points. Just imagine going without your usual paycheck. Whether it be gone completely or cut in half, there is a good chance that you’d notice the effects immediately within a month or so. Consider going without a check or half a check for eight months. Truly frightening without a short-term disability policy in place. Short-term disability is pretty much what the name suggests. It is a type of insurance coverage that will provide short-term relief in the event that you become injured or ill. Coverage typically lasts anywhere from six to twelve months, with the payouts beginning immediately. Of course, this doesn’t nearly begin to cover everything that you need to know about disability insurance.
Short-Term And Long-Term
When you are shopping around for disability insurance, you’ll quickly find that you’re going to have two main options available to you. This will be the long-term policies and short-term policies. What’s the difference and which is better for you? Unfortunately, this is a hard question to answer, as it will really come down to the type of specific coverage that you need. It will also depend on the length that you need the coverage for. However, before you delve into that, you need to understand the differences between the two.
Above, you learned that short-term disability is a type of protection that’ll cover you for six to twelve months in the event that you become injured or ill. Long-term is pretty much the same thing, except it’ll cover you for the long haul. The time periods on this coverage can range anywhere from 30 days to retirement age, 90 days, 60 days, years, and decades. Some other things that need to be known about long-term is that it generally replaces anywhere from 40 to 60 percent of your base salary. Along with this, there is a 90-day waiting period. This might vary, but 90 days is typical in Canada. This means that you’ll have to go without a paycheck for 90 days. Is this something that you could handle?
While short-term disability does replace 60 to 70 percent of your base ages, the coverage usually only lasts anywhere from six months to one year. This only makes it a viable short-term solution, hence the name. As far as waiting goes, there is little to no waiting period. You’ll likely only have to wait two weeks or less before you can start collection benefits.
Understanding The Statistics
When it comes right down to it, insurance, whether it be long-term or short-term, is all about managing risks. No insurance policy will make you impervious, but they will certainly reduce your risks and ease the burden on both you and your family. Being a Canadian, you have a one in four chance of becoming disabled before you hit retirement age. That’s pretty frightening when you sit down and consider it, especially if you are the sole provider of the household. Despite these numbers, only 20 percent of the Canadian workforce currently holds short-term disability insurance.
That aside, you’d be surprised to learn that the number one cause for disabilities probably is not what you think. Most people think that most disability cases are related to serious accidents. Not the case at all. Most disability claims are related to ongoing back and muscle pain. Next time, you might not want to shrug off those backaches. You might want to go get checked out.
Another major misconception is that only people with dangerous jobs, like logging or commercial fishing, need to worry about disability insurance. As you can see from the above statistic, this is not the case at all. Everyone needs to be worried about becoming disabled, as this could be a mental or physical thing.
Who Should Buy Short-Term Disability?
When you really think about the potential financial impact that disability could have on your family, even one that only lasts for a relatively short time, the value of short-term disability insurance becomes pretty clear. While this coverage might not be for everyone, it can be a lifesaver in the right situations. Which situations would these be?
Not Employer Offered
Despite what you might believe, not every company out there provides short-term disability. In fact, most of them don’t! Most might provide or offer long-term insurance, but they do not short-term. That being said, if your employer is one that is currently struggling to provide basic employee benefits, you can probably rest assured that they aren’t going to provide short-term, as it is considered more of an amenity than a need. Never just make the assumption that your employer has you covered. Take the time to learn, otherwise, you might leave your family with a financial obligation that they simply can’t handle.
Who doesn’t want to be their own boss? Most people do, as it comes with a lot of added benefits. Schedule flexibility, no commuting, the ability to self-direct your career, and the list goes on. And, this is not to even mention the joy of shedding a business suit or heels for jeans and t-shirts. However, just like everything in life, there are two sides. One is that there is no safety net. Not only for insurance, but for 401k, vacation, or holidays. If you are going to be a self-employed individual, you’ll most certainly want to make sure you invest in a short-term policy.
Most people make one major mistake when investing in long-term disability insurance. And, this mistake is that they make the assumption that it kicks in immediately. This is not the case at all, especially not in Canada. There is usually a 30 to 90 day waiting period. However, this is not the case with short-term disability and just one of the many reasons that it makes sense to invest. It’ll provide you with the gap coverage that you need while you are waiting on your long-term to kick in. Even if your employer offers long-term, but doesn’t offer short-term, you’ll still want to consider a policy. How does one do this?
Where To Get Short-Term Coverage
Just because short-term coverage isn’t offered by your employer it doesn’t mean that you are out of luck. It just means that you’ll need to make an extra effort to make sure you are covered. However, that extra effort will be worth it, as it’ll ensure that you and your family are protected. Luckily, there are a number of personal insurance providers in Canada that provide such coverage plans. One’s ProfessionalCoverage. They have agents standing by 24/7 just ready to assist and answer questions. They also have tons of information available online along with a chat, text, and e-mail messaging service.
Is Short-Term Really Worth It?
For some, short-term might seem like a waste of time and money. This is especially true considering that it will cost you an extra shiny penny if it isn’t offered by your employer. However, it could be the very safety net that your family needs when you are unable to provide it. If you can afford the premium, it is without a doubt worth the investment. Simply put, when you become disabled, your ability to take care of your family dwindles. Taking the time to review the short-term disability insurance options available to you currently and how they might fit into your family’s financial game plan could truly make the difference in the future when you need it the most. Never just assume that your employer has you covered or that you can’t afford coverage.
Sure, it might be expensive, but you might find that it fits in better with your other obligations than you initially imagined. While short-term is always a go-to for many, it isn’t the only option for gap coverage while waiting on your long-term to kick in. You always have friends, family, credit cards, and loans that you can opt for.
Types of Disability Insurance we offer
- Long-Term Disability Insurance (LTD)
- Short-Term Disability Insurance
- Key Person Disability Insurance
- Self Employed Disability Insurance
- Mortgage Disability Insurance
- Temporary Disability Insurance
- Supplemental Disability Insurance
Other Disability Insurance Resources that you can read
- Are Canadian Disability Insurance Premiums Tax-Deductible?
- Will My Long-Term Disability Income Be Taxable?
- Dealing With Elimination Periods For Short And Long-Term Disability Insurance
- Pregnancy And Disability Insurance
- Who Pays For Disability Insurance?
- Why Employers Offer Disability Insurance
- Maternity Leave And Disability Insurance Benefits
- How Long Do Long-Term Disability Benefits Pay?
- How Much Does Long-Term Disability Insurance Cost?
- Is Disability Insurance Worth It?
- How Much Disability Insurance Should I Get?
- What Does Disability Insurance Cover?
- What To Look For In Disability Insurance?
- Do I Need Disability Insurance After I Retire?
- Does Disability Insurance Cover Pre-Existing Conditions?
- How Does Disability Insurance Work?
- How Long Does Long Term Disability Insurance Pay?
- Is Wage Loss Insurance The Same As Short Term Disability?
- When Does Long Term Disability Insurance Start?
- Can You Buy Your Own Short Term Disability Insurance?
- Can You Get Disability Insurance If You Are Unemployed?
- Can I Buy My Own Short-Term Disability Insurance?
- Can You Get Individual Short Term Disability Insurance?
- Are Credit Cardholders Insured By Disability Insurance Plans?