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Who Should Buy Short Term Disability Insurance?

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This article provides information to Canadians about short term disability insurance, a coverage plan that pays part of your salary when you are prevented from working for a short period of time.

Short term disability insurance is a coverage plan that pays you part of your salary when illness or injury prevents you from working for a short period of time. We have all heard the expression “save your money for a rainy day!” What if that rainy day turns out to be an injury or illness that prevents you from working? How long would you be able to survive on your savings?

An injury or illness can occur on or off the job, and can cause you to have to stop working for an extended period of time. Although many of us think we could manage, purchasing short term disability insurance can alleviate several concerns and ensure a comfortable income while you are unable to work.

Short Term Disability Insurance ClaimShort Term Disability Coverage
Short term disability insurance can cover you anywhere from 13 weeks to 2 years, depending on the plan you choose. For a longer period of coverage, you would require long term disability insurance (see article12-long-term-disability-insurance.html).

The benefit amount allocated to you will be based on the type of policy you have opted to buy, and a few other factors, including your level of disability (partial or otherwise). As long as you are under a doctor’s care, and are advised not to go back to work, your benefits will continue according to the specified terms of your policy.

You can expect to receive the first benefit payment from your insurance company anywhere from one to 14 days after becoming injured or sick. It is comforting to know that payments are immediately issued if you suffer an injury. However, if you become ill, the waiting period for compensation will most likely be longer, simply because an illness must be pronounced grave enough to prevent you from working, and that can take time.

Short term disability insurance covers various situations. In 2008, a study was conducted in order to examine the main reasons for using short term disability insurance. It was reported that pregnancy accounted for 21 percent, injuries for 10 percent, digestive/intestinal diseases for 7 percent, and back injuries for 6 percent.

How to get Short Term Disability Insurance
Your employer may offer you disability insurance as part of your benefits package, or optional insurance for which you would be responsible for paying the premiums. You can also purchase an individual short term disability insurance policy, which will cover you up to two years, as would the one offered by an employer. However, it is recommended that you purchase the coverage through your workplace, if possible, as an individual policy is subject to the state of your health. Moreover, it is more expensive, in most cases.

Should you buy Short Term Disability Insurance?
It is a good idea to invest in a short term disability insurance policy if you fall under any of the following categories:

  • You do not have enough savings to cover your living expenses for 6 months or more
  • Your savings are set aside for a long-term project or financial goal
  • You have debts (mortgage, car, and/or credit cards), requiring payments on a regular monthly basis
  • You are the sole “bread winner” of your family.

What to consider when purchasing Short Term Disability Insurance

  • Premium waiver: some insurance companies will waive (defer) the premium payments during your absence from work due to sickness or injury
  • Waiting/elimination period: all policies have a waiting or elimination period, extending from the time of your injury/illness to the receipt of your first payment
  • Inflation rider: this is a good option to have in the event you are unable to work for a long period of time; however it will up the cost of your insurance policy
  • Non-cancelable clause: providing you are paying the premiums, the insurance company cannot cancel your policy or raise your premiums
  • Renewable: although every policy has different renewal rules, an insurance company cannot modify or increase the premium rates when the policy specifies that it is renewable.


About the Author:
Adriana Stefania is a freelance writer for Canada Health Insurance. For more information on health insurance for Canadians please visit