Short-Term Disability Insurance Worth It?

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Short-Term Disability Insurance Worth It?

Postby Juniormint » Thu May 17, 2012 9:43 pm

Hey guys,

I'm trying to decided if getting short-term disability insurance through my employer is worth it. I feel like I don't need it. I'm young and have no health problems and rarely get sick as it is. I do have long-term disability insurance that would kick in after 90 days, and now my employer is offering short-term that would apply for the those 90 days before my long-term kicks in.

It covers 60% of my weekly salary and costs me about $30 a month to get it.

My employer also offers a sick-pool option of which I am not currently a part of but am thinking about joining next enrollment(October). The sick pool covers 90 days worth of sick time until my long-term disability would kick in or if I need more sick time than what I have earned. And for this, I only need to donate two days of my sick time to the pool and the only other time they deduct is if they are in need of hours.

I think that being part of the sick pool is enough instead of paying for short-term disability. I'm still working on building a decent emergency fund (current top priority) and only have about three months of expenses saved.

Opinions, comments? Very Much appreciated.
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Re: Short-Term Disability Insurance Worth It?

Postby xerty24 » Thu May 17, 2012 9:49 pm

Without knowing your salary, it's hard to know if $30/month is a good or bad price. If you have 3 months of expenses and could get by on 60% of your salary from LTD after that point, I'm not sure you need it. OTOH, the sick pool idea seems good, esp if you work at a company that doesn't let you take off much anyway or use your sick days as vacation or extra salary if unused (given you probably don't need most of them).
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Re: Short-Term Disability Insurance Worth It?

Postby BruDude » Thu May 17, 2012 10:13 pm

xerty24 wrote:Without knowing your salary, it's hard to know if $30/month is a good or bad price.


x2. Also, your group DI probably doesn't cover what you think it might cover.
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Re: Short-Term Disability Insurance Worth It?

Postby Juniormint » Thu May 17, 2012 10:24 pm

xerty24 wrote:Without knowing your salary, it's hard to know if $30/month is a good or bad price. If you have 3 months of expenses and could get by on 60% of your salary from LTD after that point, I'm not sure you need it. OTOH, the sick pool idea seems good, esp if you work at a company that doesn't let you take off much anyway or use your sick days as vacation or extra salary if unused (given you probably don't need most of them).


Currently make 43K. I can take off sick whenever I need to. I get sick time, personal days, and vacation days. Sick time does not accrue and I don't get paid for what I don't use.
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Re: Short-Term Disability Insurance Worth It?

Postby xerty24 » Thu May 17, 2012 11:24 pm

Sick pool for unused, valueless days seems good, unless you're the type to take a "sick of working" day to use them all up.

Math: $360/year gets you up to 1/4 of a year at 60% salary of $43k = $6.45k benefit. That's a 5.5% implied probability of using the full ST disability benefit per year to break even.

If you think your more likely to get disabled than that, get the coverage. If not, don't. You wont be screwed either way with your reserves, so make the right bet for the odds.
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Re: Short-Term Disability Insurance Worth It?

Postby MathWizard » Thu May 17, 2012 11:54 pm

Self-insure for the short-term disability.

It's the big expenses you buy insurance for.
That why you need to purchase long-term disability ins., but not short-term.

The 90 day disability is one of the things your EF is for.
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Re: Short-Term Disability Insurance Worth It?

Postby DFWinvestor » Fri May 18, 2012 1:37 pm

MathWizard wrote:Self-insure for the short-term disability.

It's the big expenses you buy insurance for.
That why you need to purchase long-term disability ins., but not short-term.

The 90 day disability is one of the things your EF is for.


This.

Short term disability is a penalty for those who lack the discipline or means to come up with an emergency fund.
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Re: Short-Term Disability Insurance Worth It?

Postby Sam I Am » Fri May 18, 2012 2:13 pm

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Re: Short-Term Disability Insurance Worth It?

Postby Juniormint » Sat May 19, 2012 9:53 pm

Thank you for all the helpful and informative replies. I've decided to forgo the short-term disability and take advantage of the sick-pool. :happy
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Re: Short-Term Disability Insurance Worth It?

Postby mikep » Sat May 19, 2012 11:21 pm

DFWinvestor wrote:
MathWizard wrote:Self-insure for the short-term disability.

It's the big expenses you buy insurance for.
That why you need to purchase long-term disability ins., but not short-term.

The 90 day disability is one of the things your EF is for.


This.

Short term disability is a penalty for those who lack the discipline or means to come up with an emergency fund.



Or a penalty if your state requires it, but is tax deductible like state income taxes in that case and can extend your elimination period on LTD.
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Re: Short-Term Disability Insurance Worth It?

Postby BruDude » Sun May 20, 2012 10:34 am

STD is usually paired with policies that have a longer elimination period, usually 180 or 365 days. That's still a pretty hefty income loss for someone that is making good money, probably more than most people have saved in an emergency fund.
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Re: Short-Term Disability Insurance Worth It?

Postby Howie » Sun May 20, 2012 11:55 pm

MathWizard wrote:Self-insure for the short-term disability.

It's the big expenses you buy insurance for.
That why you need to purchase long-term disability ins., but not short-term.

The 90 day disability is one of the things your EF is for.


Good luck getting an insurance company to honor their contractual LTD commitment...they are experts in denying claims- especially those whose policies are governed by ERISA laws.
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Re: Short-Term Disability Insurance Worth It?

Postby BruDude » Mon May 21, 2012 2:23 pm

Howie wrote:Good luck getting an insurance company to honor their contractual LTD commitment...they are experts in denying claims- especially those whose policies are governed by ERISA laws.


That is why it's important to have a good individual LTD policy with favorable contractual terms and definitions. Group LTD policies are usually garbage...though better than nothing.
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Re: Short-Term Disability Insurance Worth It?

Postby Howie » Mon May 21, 2012 2:48 pm

BruDude wrote:
Howie wrote:Good luck getting an insurance company to honor their contractual LTD commitment...they are experts in denying claims- especially those whose policies are governed by ERISA laws.


That is why it's important to have a good individual LTD policy with favorable contractual terms and definitions. Group LTD policies are usually garbage...though better than nothing.


Amen. I'm currently learning the hard way while a disabled family member suffers through the associated indignities. I would note with this case (and is probably quite common) is the insurance company demanded that SS Disability benefits be pursued. The family member was approved without any denial (which, I understand is rare for the SS Administration not to deny at least initially) due to the obvious disabling physical conditions. Now the insurance company, after paying for a number of months, has decided to deny further benefits and has indicated it uses a "different set of criteria than the SSA to assess disability". Ironically, on paper, the qualifications are more stringent for SSA LTD than for the insurance company's policy. I understand we are not alone as this is quite typical of insurers to deny whenever they can- hoping the "customer" will simply go away as their bottom line is padded knowing the difficulty built into the system to force them to honor their contractual obligation.
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Re: Short-Term Disability Insurance Worth It?

Postby BruDude » Mon May 21, 2012 3:05 pm

Howie wrote:Amen. I'm currently learning the hard way while a disabled family member suffers through the associated indignities. I would note with this case (and is probably quite common) is the insurance company demanded that SS Disability benefits be pursued. The family member was approved without any denial (which, I understand is rare for the SS Administration not to deny at least initially) due to the obvious disabling physical conditions. Now the insurance company, after paying for a number of months, has decided to deny further benefits and has indicated it uses a "different set of criteria than the SSA to assess disability". Ironically, on paper, the qualifications are more stringent for SSA LTD than for the insurance company's policy. I understand we are not alone as this is quite typical of insurers to deny whenever they can- hoping the "customer" will simply go away as their bottom line is padded knowing the difficulty built into the system to force them to honor their contractual obligation.


Requiring the insured to apply for SSDI before getting group LTD benefits is common. Individual policies do not have such a requirement and most will not offset the benefits even if receiving SSDI/worker's comp/etc. The insurance company has to follow the policy definitions, which are probably not very favorable compared to what can be purchased on the individual market. Most group LTD policies have an own-occupation definition of disability for no more than two years, do not have COLA, do not have benefits for partial disability, and so on.
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Re: Short-Term Disability Insurance Worth It?

Postby nonnie » Mon May 21, 2012 3:13 pm

Howie wrote:Amen. I'm currently learning the hard way while a disabled family member suffers through the associated indignities. I would note with this case (and is probably quite common) is the insurance company demanded that SS Disability benefits be pursued. The family member was approved without any denial (which, I understand is rare for the SS Administration not to deny at least initially) due to the obvious disabling physical conditions. Now the insurance company, after paying for a number of months, has decided to deny further benefits and has indicated it uses a "different set of criteria than the SSA to assess disability". Ironically, on paper, the qualifications are more stringent for SSA LTD than for the insurance company's policy. I understand we are not alone as this is quite typical of insurers to deny whenever they can- hoping the "customer" will simply go away as their bottom line is padded knowing the difficulty built into the system to force them to honor their contractual obligation.


If this is an individual policy, this definitely needs to be pursued. This happened to a family member of mine and he had to hire a lawyer but finally prevailed. Although the link below is to a board sponsored, I believe by insurance agents, it still is a valuable resource and you can ask questions there:

http://www.disabilityinsuranceforums.co ... ookies=Yes
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Re: Short-Term Disability Insurance Worth It?

Postby Howie » Mon May 21, 2012 3:42 pm

nonnie wrote:
Howie wrote:Amen. I'm currently learning the hard way while a disabled family member suffers through the associated indignities. I would note with this case (and is probably quite common) is the insurance company demanded that SS Disability benefits be pursued. The family member was approved without any denial (which, I understand is rare for the SS Administration not to deny at least initially) due to the obvious disabling physical conditions. Now the insurance company, after paying for a number of months, has decided to deny further benefits and has indicated it uses a "different set of criteria than the SSA to assess disability". Ironically, on paper, the qualifications are more stringent for SSA LTD than for the insurance company's policy. I understand we are not alone as this is quite typical of insurers to deny whenever they can- hoping the "customer" will simply go away as their bottom line is padded knowing the difficulty built into the system to force them to honor their contractual obligation.


If this is an individual policy, this definitely needs to be pursued. This happened to a family member of mine and he had to hire a lawyer but finally prevailed. Although the link below is to a board sponsored, I believe by insurance agents, it still is a valuable resource and you can ask questions there:

http://www.disabilityinsuranceforums.co ... ookies=Yes


Thanks for the link. Regrettably it is a group policy so the policyholder is comparatively powerless- and the insurance company knows it and is exploiting.
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Re: Short-Term Disability Insurance Worth It?

Postby Sam I Am » Mon May 21, 2012 7:04 pm

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Re: Short-Term Disability Insurance Worth It?

Postby imgritz » Mon May 21, 2012 7:11 pm

No insurance is worth it ... until you need it. :D

Here's some factoids "According to the Council for Disability Awareness, 3 in 10 people entering the workforce today will become disabled before retiring. Also, 1 in 7 people can expect to be disabled for five years or more before retirement. Statistics like that should make short-term disability insurance a vital piece of your overall financial plan."

If you become one of the disabled, do you have enough financial resources to survive the ordeal? Personally, I use all of my work's benefits because I simply don't know what the future holds.
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Re: Short-Term Disability Insurance Worth It?

Postby serbeer » Mon May 21, 2012 7:23 pm

We decided not to pay for group STD policy for my wife (as she started working for small employer that has high premiums), but did sign up for LTD which is much less expensive for some reason. My employer pays for STD, so, again, I only had to sign up for LTD.

We figured that paying rather high monthly premium for less than 12 weeks of benefits (because all STD plans have a week of elimination period) does not make sense. We can afford to pay the gap ourselves if need to.

Luckily, my wife had free STD insurance at her previous employer and it twice covered 60% during 7 weeks (post-elimination period) of maternity leaves she took while working there. We simply ate the remaining 5 week of lost income under FMLA time. No reason why we would not able to handle full 12 weeks of STD if have to, knock on the wood...
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Re: Short-Term Disability Insurance Worth It?

Postby grabiner » Mon May 21, 2012 11:38 pm

Juniormint wrote:My employer also offers a sick-pool option of which I am not currently a part of but am thinking about joining next enrollment(October). The sick pool covers 90 days worth of sick time until my long-term disability would kick in or if I need more sick time than what I have earned. And for this, I only need to donate two days of my sick time to the pool and the only other time they deduct is if they are in need of hours.


If you can donate your sick time to the sick pool, then it's a short-term disability policy which costs essentially nothing (since you can get back the sick time if you need it), and it doesn't have most of the administrative costs of a policy through an insurance company. In addition, I would expect you to have less trouble filing a claim with the sick pool than with an insurance company.

Even if your employer requires you to donate annual leave rather than sick leave, it's still a reasonable deal.
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Re: Short-Term Disability Insurance Worth It?

Postby nonnie » Tue May 22, 2012 4:44 pm

imgritz wrote:Here's some factoids "According to the Council for Disability Awareness, 3 in 10 people entering the workforce today will become disabled before retiring. Also, 1 in 7 people can expect to be disabled for five years or more before retirement.


That's the kind of statistic the insurance agency my company was using for their employee DI policies used to sell me a personal disability policy. I'm still not sure why I bought the policy--luckily an old-fashioned own occupation policy-- but I also bought a rider that paid me an additional $800 per month if my claim was turned down by SSA although the rider said I *had* to apply for SSDI and appeal a turn-down decision. I also purchased another rider (and I was never that big on insurance) that allowed me to add an additional $500 of monthly coverage two times over the next four years. I exercised the first $500 (which didn't offer own occ coverage) rider but before I could exercise the second I became disabled. Social Security denied my claim saying not only could I work but that I could work at my own occupation.

I collected almost $500K from that policy and was able to support myself with those funds until I turned 65. Pay attention to the factoids!
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