If you are after insurance against short term disabilities, the good news is that income protection can cover you.
When illness and injury strike, they can wreak a whole lot of havoc with your life. If you contracted a serious illness or injured yourself and were unable to work, how would you be able to survive without a regular income? Consider these on-going costs:
- Mortgage repayments
- Pay off debts
- Providing for your family
This is where short-term disability insurance or income protection cover comes in. Income protection provides a steady stream of income while you are unable to work. You can use the funds from short-term disability cover to pay any ongoing bills and expenses and look after your family’s financial wellbeing.
What is Short-Term Disability Insurance?
Short-term disability insurance is income protection designed to provide you with an ongoing financial payment when you are sick or injured and unable to work.
What can it cover?
Without a steady stream of income coming in, many people would be simply unable to cope with on going expenses. Short term disability
- Mortgage repayments to make
- Bills e.g. electricity
- School fees
How long am I covered for?
Short-term disability cover pays a percentage of your salary for a specified amount of time. A short term policy will typically cover you from 3 months to one year.
How long will I have to wait for a short-term disability policy?
Coverage generally starts anywhere from zero to 14 days after you suffer a condition that leaves you unable to work.
Can I obtain a short-term disability insurance plan through my employer?
Some businesses offer short-term disability insurance cover to their employees. These plans can provide a very useful supplement for your income when you’re sick or injured.
What are the benefits of going through my employer?
Some of the benefits of going through an employer include:
- Cheaper premiums. A group policy often means policies are bought in bulk an can mean cheaper premiums.
- Automatic acceptance. Group policies often allow it's members to receive automatic acceptance
What are the drawbacks of going through my employer?
Before you sign on to a plan provided by your employer, it pays to read the terms and conditions closely and make sure you understand exactly what the policy does and doesn’t cover.Some common drawbacks include:
- Short term benefits. Some employer plans will only offer benefits for a short period of time,
- Stricter rules on whats claimable. Others may require you to satisfy several difficult criteria to qualify for benefits.
- Less flexibility. Your short-term disability insurance may be tied to your current occupation.
So how should I obtain my policy?
A standalone insurance plan is portable, meaning it’s not tied to your job, and also lets you tailor the level of cover to your specific wants and needs. Speak to an insurance consultant if you need help determining which approach is best for you.
Do I need short term disability cover if I have workers compensation?
Some people think they can rely on workers’ compensation to protect their family’s financial wellbeing in the event of an illness or injury, but this is most definitely not the case. In order to qualify for workers’ compensation you will need to satisfy a number of strict rules of eligibility. Furthermore, if you don’t meet these requirements and you don’t have short-term disability cover in place, you could find yourself in big trouble.
What does workers compensation cover?
Workers’ compensation is designed to protect employers from any employee workplace related claims, and it only provides cover for injuries and illnesses suffered at work.
- A 2008 Australian Institute of Health and Welfare study revealed that 75 per cent of injuries in Australia happen outside of work.
- Figures from the Australian Bureau of Statistics reveal that more than 2.6 million Australians aged under 65 are living with a physical disability, with many including conditions like cancer, stroke, heart disease and depression that in most cases are not covered by workers’ compensation.
Here's why you should consider short-term disability
Short-term disability cover provides:
- Cover for a much wider range of illnesses and injuries you may suffer.
- Cover is available 24 hours a day, 365 days a year anywhere in the world.
- An insured amount that's right for your needs.
What is the difference between short-term and long-term disability insurance?
As the name would suggest, short-term disability insurance is designed to pay your benefits for a shorter period of time than long-term cover. It's also designed to pay you benefits sooner than its long-term counterpart.
- Shorter waiting period. The waiting period is the amount of time you’ll have to wait after becoming disabled before your benefits kick in. Waiting periods under short-term policies typically range from zero to 14 days, while waiting periods under long-term policies are longer, with the average length being a 90-day waiting period. Some short-term policies will even offer separate waiting periods for illness and injury.
- Shorter benefit period. The benefit period under a short-term disability insurance policy is usually three months, six months, one year, or even two years. On the other hand, long-term policies can pay benefits for a few years, until you reach age 65 or even for the rest of your life.
Types of short term disability insurance
- Sickness and accident insurance. This type of cover provides you with regular benefit payments of 75 per cent of your usual income if you are unable to work due to a serious accident or sickness. It offers a comprehensive range of benefits to policyholders and offers peace of mind and financial security.
- Personal accident insurance. Personal accident insurance is a simplified form of protective cover that will protect you against accidental injury. If you suffer a specified injury, you will receive cover for 75 per cent of your income. No medical underwriting is usually required, making this a more affordable option than sickness and accident insurance. You can choose to receive your benefit as a lump sum or as an ongoing monthly income.
- Accident-only insurance. This type of cover pays out a monthly or lump sum benefit if you suffer a serious bodily injury, total and permanent disablement, partial disablement or death. Injuries such as broken bones, paralysis and burns are all covered under an accident-only insurance policy.