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Is short-term disability insurance worth it?

Short-term disability insurance is worth having if you get coverage through your employer.

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By

Andrew HurstSenior Editor & Licensed Auto Insurance ExpertAndrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

Edited by

Anna SwartzAnna SwartzSenior Managing EditorAnna Swartz is a senior managing editor who specializes in home, auto, renters, and disability insurance at Policygenius. Previously, she was a senior staff writer at Mic and a writer at The Dodo. Her work has also appeared in Salon, HuffPost, MSN, AOL, and Heeb.
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Reviewed by

Maria FilindrasMaria FilindrasFinancial AdvisorMaria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.

Updated|3 min read

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While short-term disability insurance doesn’t offer as much protection as a long-term disability policy, it’s still worth having short-term disability insurance, especially if you get coverage for free through your employer.

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What does short-term disability insurance cover?

Short-term disability insurance replaces your income while you can’t work because of an injury or illness. You can use your disability insurance payments on your regular expenses, like rent, groceries, mortgage payments, subscription services, and childcare.

Short-term disability insurance can pay out for absences caused by a range of illnesses or injuries, including:

  • Mental-health conditions like anxiety or depression

  • Broken bones after an accident

  • Back or joint pain

  • Complications from pregnancy or childbirth

  • Head injuries

  • Chronic fatigue flare-ups

Should you get short-term disability insurance?

The short answer is, if short-term disability is available as a benefit through your work, yes, you should get it. If not, then it may not be worth it to buy your own standalone short-term disability policy.

Basically, an individual short-term disability policy is just too expensive for the coverage it provides. You’re better off saving up for short-term emergencies and getting a long-term policy in case you’re out of work indefinitely.

1. Short-term disability insurance is expensive

Short-term disability insurance usually will pay out for 12 months at most, but it can cost the same as a long-term disability insurance policy which can cover you for much longer. If you’re going to pay out of pocket for an individual disability policy, a long-term one is a better investment.

2. It’s more cost effective to set up your own emergency fund

You may not need short-term disability insurance if you can set up an emergency fund to pay for things like your rent or mortgage, utilities, child care, and day-to-day expenses while you can’t work. Once you reach a savings goal, you can stop paying into your emergency fund and it will still be there if you need it.

3. You may already have coverage for short-term disabilities

There are a few ways to get short-term income protection without paying for your own personal short-term disability insurance policy.

  • Disability insurance through work: You may get group disability insurance through your job — and it may be free or at least cheaper than what you’d pay for a private policy.

  • State-provided disability insurance: Some states — California, Hawaii, New Jersey, New York, and Rhode Island — have statewide temporary disability insurance programs.

  • Workers’ compensation: If you’re hurt at your job, workers’ compensation can replace your income while you’re out of work.

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Are there times when you do need short-term disability insurance?

Yes, if short-term disability insurance is offered as an employee benefit, you should opt in. It can be essential financial protection, especially when combined with your own long-term policy.

But there are also times when it may make sense to buy your own short-term disability insurance policy. Let’s say you’re employed but don’t get short-term disability through work, and don’t have enough saved up to cover your expenses if you’re out of work for more than a couple of weeks. 

You can get a short-term policy with an elimination period of two weeks (or however long you could afford to live on your savings), and then drop it once you have a sizable emergency fund saved up.

Do you need long-term disability insurance?

Yes, it’s worth having long-term disability insurance even if you don’t have a short-term policy. It’s hard to save enough money to live on for years or decades in case of a serious illness or injury — that’s where a long-term policy would come in.

If you have long-term disability insurance, you can pair it with your existing savings or a short-term policy through work. That way you’ll be protected whether you’re out of work for a few months or a few years.

→ Read more about how short and long-term disability insurance stack up

Cost of short-term disability insurance

Short-term disability insurance costs 1% to 3% of your income, assuming you don’t get it for less through an employer. A short-term disability policy can cost the same as long-term disability insurance, even though the benefit period is much shorter.

Your short-term disability may be even more expensive if you’re older, a smoker, or you buy a policy with lots of extra coverage added (these optional add-ons are called insurance riders).

Annual salary

Cost of disability insurance

$75,000

$63 to $188 per month

$100,000

$83 to $250 per month

$125,000

$104 to $313 per month

$150,000

$125 to $375 per month

$175,000

$146 to $438 per month

$200,000

$167 to $500 per month

$225,000

$188 to $563 per month

$250,000

$208 to $625 per month

$275,000

$229 to $688 per month

$300,000

$250 to $750 per month

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Frequently asked questions

Is paying for short-term disability insurance worth it?

It might be worth paying for short-term disability insurance if you don’t have enough saved up to cover between three and six months of your expenses in case you’re unable to work. Short-term disability insurance can be expensive, but it offers some financial protection.

What is short-term disability insurance good for?

Short-term disability insurance is a good way to replace your paycheck without draining your savings if you’re injured or sick and can’t work. Short-term disability insurance only lasts for a few months, so having a long-term disability insurance policy is the best way to fully protect yourself.

How should I use short-term disability insurance?

You can use your short-term disability benefits just like your normal income. Your policy can cover medical expenses, mortgage payments, student loan payments, and even your grocery bills.

Should you get short-term disability insurance through work?

Yes, it’s usually a good idea to get short-term disability insurance if your job offers it as long as it’s free or partially covered by your employer (the cost on the open market can be anywhere from 1% to 3% of your salary).

Author

Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

Editor

Anna Swartz is a senior managing editor who specializes in home, auto, renters, and disability insurance at Policygenius. Previously, she was a senior staff writer at Mic and a writer at The Dodo. Her work has also appeared in Salon, HuffPost, MSN, AOL, and Heeb.

Expert reviewer

Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.

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