What should you do if your employer does not offer short-term disability insurance as an employee benefit? Many do not.
Ask your employer to offer a voluntary program. The qualifications are easier, the benefits are better, and the premiums are lower.
Employees pay the premium through payroll deduction, which means there is no direct cost to employers. Still, many employers say no.
The other option is to buy short-term disability insurance as an individual. However, be ready for strict underwriting, fewer benefits, and higher premiums.
Premiums For Individual Coverage
Most people pay higher premiums when buying short-term disability alone rather than through their employer. Insurance companies raise prices when they cannot pool risks with many other workers.
If your employer does not offer the benefit, buying coverage alone may be the only way to protect your income. But some people find cheaper coverage on their own.
Premium Rates
You may pay higher premiums when buying coverage alone, but intelligent choices could lower your costs.
Three choices affect short-term disability premiums:
- Elimination period: how soon do payments start
- Benefit period: how long do payments last
- Benefit amount: the size of the weekly check
Use our short-term disability cost calculator to learn how these three choices impact premiums. Here is a preview: the elimination period has the most decisive influence.
Request a quote based on your needs, not what a pushy insurance agent suggests. For example, if you have a sizable emergency fund, you may not need a 7-day elimination period. A 30- or 60-day choice might be suitable.
Industry Premiums
People working in high-risk industries might be better off buying short-term disability insurance as individuals. Insurance companies price premiums for groups based on their industry risk rating.
| Rating | Risk Level | Premium |
|---|---|---|
| AAA | Lowest | Lowest |
| AA | Lower | Lower |
| A | Higher | Higher |
| B | Highest | Highest |
For example, US Postal Service employees often pay the highest premiums when buying coverage at work. Letter carriers and package sorters often suffer musculoskeletal disorders from repetitive tasks.
Meanwhile, USPS employees in office roles might pay the same premiums even though their jobs are safer. People in low-risk jobs in high-risk industries might find better deals outside their employers.
Benefits For Individual Policies
Individual short-term disability often has less attractive benefits than employer group policies. Insurance companies offer fewer benefits when they cannot pool risks with many workers.
Maternity Leave
Expect fewer maternity leave benefits when buying short-term disability leave outside your employer. The insurance companies typically lose money on these policies and scale back what they cover.
Consider this typical comparison between buying through an employer and buying on your own:
| Through Employer | Outside Employer | |
|---|---|---|
| Complications of pregnancy before birth | Yes | Yes |
| Recovery from labor and delivery | Yes | No |
| Postpartum medical complications | Yes | Yes |
Monthly Amount
When buying short-term disability as an individual, expect smaller monthly benefits. Most policies limit benefits to a percentage of income and a maximum amount.
Insurers cover the smaller of these two figures. Consider this typical comparison between buying through an employer and buying on your own:
| Through Employer | Outside Employer | |
|---|---|---|
| Percentage of Income | 70% | 60% |
| Maximum Amount | $7,500 | $4,000 |
Qualifications For Individual Coverage
Many applicants find it more challenging to qualify for individual short-term disability coverage. The criteria are stricter when the insurance company cannot pool risks with many workers.
Pre-Existing Conditions
Short-term disability covering pre-existing conditions will be challenging to find outside an employer. Insurers are reluctant to issue policies to individuals with ongoing health problems.
A pre-existing condition is a sickness or physical issue for which you got treatment or medical advice in the past twelve months.
Getting coverage approved while pregnant is challenging for this reason. Pregnant women have a pre-existing condition and will not qualify for any maternity-related disability benefits for at least twelve months.
Past Health Issues
People with previous health problems will find it challenging to buy short-term disability outside an employer. Insurers might guarantee that policies will be issued to groups but not individuals.
Expect the insurance company to reject applicants who have received treatment or medical advice during the last five years for any of these conditions and others.
| Heart attack | Heart surgery | A high blood pressure reading of 140/90 or above |
| Stroke | Transient ischemic attack (TIA) | Cancer (except basal cell skin cancer), |
| End-stage renal/kidney disease | Muscle, back, joint disorders | Diabetes |
| Cirrhosis | Emphysema | Multiple sclerosis |
| Fibromyalgia | Chronic fatigue syndrome | Alcohol or drug usage |
| Neurological disorder | Lung disease | Digestive disease |
People with a poor health history are likely to file a claim. They are also highly motivated to purchase coverage, explaining why insurance companies take measures to protect themselves.
