Short-Term Disability Insurance for the Self-Employed

When you work for yourself, you don’t have the luxury of paid sick leave. If you can’t work due to an injury or illness, you can’t earn a living.

That’s why short-term disability insurance is so essential for self-employed individuals. In a world where uncertainties are the norm, short-term disability insurance stands as a shield against the financial storm that an unexpected health issue can bring.

What’s the difference between short-term and long-term disability insurance?

What is short-term disability insurance for self-employed?

Short-term disability insurance for self-employed is designed to replace a portion of your income (usually around 40-60%) if you are unable to work due to a covered medical condition.

Unlike its long-term counterpart, which kicks in after an extended period, short-term disability coverage focuses on those initial weeks or months of healing. Learn more about the differences between short and long-term disability insurance.

How does short-term disability insurance for self-employed work?

Short-term disability insurance for self-employed individuals works as a financial safety net during unexpected illness or injury. When a self-employed person cannot work due to a covered medical condition, short-term disability insurance can provide them with a portion of their income for a limited period, helping to bridge the gap during recovery.

What qualifies for short-term disability?

Short-term disability insurance benefits come into play when you have a qualifying injury or illness that limits your ability to work. This insurance covers critical illnesses, including heart attack, stroke, cancer, organ failure, cognitive impairment, and serious injuries that lead to an inability to work.

How much is short-term disability insurance?

When it comes to the cost of short-term disability insurance, insurance premiums can range from around 1% to 4% of your annual income. For example, if you earn $50,000 a year, your premium might be between $500 and $1,500 annually.

Remember, this is just an estimate, and your cost for disability insurance could be higher or lower based on other factors such as coverage amount, elimination period, benefit period, age, salary, health history, occupation, gender, and where you live.

Is short-term disability paid weekly?

Short-term disability benefits could be paid weekly, but the cadence ultimately depends on the specific terms of the disability insurance policy you choose. There are options for short-term disability benefits to be paid monthly, bi-weekly, or weekly.

Can I work while on short-term disability?

Whether you can work while on short-term disability depends on how your policy defines what a disability is.

If an insurance policy uses an “own occupation” definition of disability, it typically means the person is considered disabled if they cannot perform the duties of the job they held when they became disabled. In this case, the person might take on a different job and still receive disability benefits, as long as the duties of the new job are substantially distinct from the job they had when they became disabled.

However, if your policy has an “any occupation” definition of disability, a person is only considered disabled if they are unable to perform the duties of any suitable job. Under this definition, if you could still work, even at a job that pays less, then you wouldn’t be eligible to receive disability benefits.

Can you work part-time on short-term disability?

Again, whether you can work part-time while on short-term disability depends on your policy’s definition of disability.

What is the difference between short-term disability and FMLA?

The most significant difference between short-term disability and the Family and Medical Leave Act (FMLA) is that short-term disability insurance is paid leave, while FMLA is not. There are plenty of other differences between disability insurance and FMLA, which we explore in this article: FMLA vs Disability Insurance.

Best short-term disability insurance for self-employed

The best short-term disability insurance for self-employed workers ultimately depends on their individual needs. Some things to consider when looking for the best short-term disability insurance:

  • Assess your needs: Consider your financial responsibilities, such as monthly bills, loans, and other expenses. Evaluate how much income you’d need to cover these obligations if you were unable to work due to a disability.
  • Understand coverage options: Each short-term disability policy has its own set of terms, waiting periods, and coverage limits. Some might cover only accidents, while others extend to illnesses as well. And just like any insurance, there’s a waiting period before you can start receiving benefits.
  • Evaluate your savings: Consider how much savings you have as a backup. If you have a robust emergency fund, you might need less coverage than someone without savings.
  • Review existing insurance: Check if you have any existing insurance policies, like life insurance, that might have disability riders. This can provide additional coverage without a separate policy.
  • Read the fine print: Carefully read policy documents, paying attention to terms, conditions, and potential limitations or exclusions.

Remember, choosing the right disability insurance is a personalized decision based on your unique circumstances. Take your time, do thorough research, and don’t hesitate to seek expert advice.

Self-employed short-term disability insurance

Life is full of unexpected twists and turns, and sometimes, those twists can throw a wrench in your plans, especially when it comes to your health.

So, whether you’re a freelancer, a 9-to-5 warrior, or someone in between, consider short-term disability insurance as your partner in navigating life’s unexpected detours.