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Short-term Disability Insurance

Short-term disability (STD) insurance provides temporary income replacement when you are unable to work for a limited period due to illness, injury, or surgery. It helps protect your income during the early stages of a disability, usually before long-term disability (LTD) benefits begin. This coverage ensures financial stability while you recover and are expected to return to work within a few weeks or months.

The benefit period for short-term disability typically ranges from 15 weeks to six months, though it varies by plan. Payments usually begin after a short waiting period, often between zero and 14 days, depending on whether the disability results from illness or accident. The benefit amount is generally a percentage of your regular income, such as 60 to 75 percent, and may be taxable or non-taxable depending on who pays the premiums.

Example:

If your short-term disability policy replaces 70 percent of your $4,000 monthly income and you are off work for eight weeks after surgery, you would receive $2,800 per month until you recover or the benefit period ends.

What to Watch For:

Review your plan’s definition of disability and the length of the waiting and benefit periods. Some employers provide short-term disability benefits through payroll rather than an insurance company, while others use private insurers. Keep medical documentation from your physician, as insurers require proof of disability to approve and continue payments.

Related Terms

Policy (Contract)

A policy, also referred to as a contract, is the legally binding agreement between an insurance company (the insurer) and the policyholder that defines the terms, conditions, and obligations of coverage. It outlines what is insured, the benefits provided, the premium amount, exclusions, and the responsibilities of both parties. Once the insurer accepts the application and the first premium is paid, the policy becomes active and enforceable.

Long-term Disability insurance

Long-term disability (LTD) insurance provides income replacement if you are unable to work for an extended period due to illness or injury. It ensures financial stability by paying a percentage of your regular income, typically between 60 and 85 percent, after you have been disabled for a specific waiting period known as the elimination period. LTD benefits continue until you recover, reach a set benefit end date, or reach retirement age, depending on the terms of the policy.

Effective Date

The effective date is the day your insurance coverage officially begins. From this date forward, you are eligible to receive benefits for covered health, dental, life, or disability expenses under the terms of your policy. The effective date is established once your application has been approved, all requirements are met, and the first premium payment has been received, unless otherwise specified in the policy.

Benefit Period (Vision)

The benefit period for vision refers to how often your vision care coverage renews and allows you to make new claims for eligible expenses such as glasses, contact lenses, or eye exams. Unlike other benefits that reset each year, vision care often renews every two benefit periods, which can mean every 24 consecutive months rather than every calendar year.

Certificate of Insurance

A certificate of insurance is an official document issued by an insurance company that summarizes the key details of your coverage. It serves as proof that you are insured and outlines the essential terms of your policy, including the type of coverage, effective dates, benefit limits, exclusions, and any dependents or beneficiaries listed under the plan.

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