Short-term disability insurance is a key to workers’ financial plans


The U.S. economic downturn may be coming to an end but the lessons learned by workers – including the value of a paycheck and the importance of protecting their finances – will reverberate for years. As workers strive to safeguard their incomes, an insurance product that warrants serious consideration is short-term disability. After all, just over one in four of today’s 20-year-olds will become disabled before reaching age 67.

Given the frequency of disabling accidents and injuries, you’d think that Americans would be diligent about setting aside funds for a rainy day. However, most aren’t that practical or that flush with cash. According to the 2014 Aflac WorkForces Report, 66 percent of workers wouldn’t be able to adjust to the high financial costs associated with an illness or injury, and 49 percent have less than $1,000 on hand to pay unexpected out-of-pocket costs associated with a medical event.

What is voluntary disability insurance?

Short-term disability insurance is one of many voluntary insurance policies available to help workers cope with out-of-pocket costs associated with serious accidents or illnesses — costs major medical was never intended to cover. In the event of a physician-documented disability, participants receive cash benefits that can be used to help pay for daily living expenses, such as the mortgage or rent, gas, groceries, utilities and other necessities.

It’s important to note that workers who become disabled may lose more than their ability to earn a living: They may also lose savings, retirement funds or even their homes. Disability insurance plays an important role in financial planning and safeguarding their financial futures.

A real-life experience

I had an accident back in January where I ruptured a disc in my neck. I had to file a claim under my Aflac short-term disability and accident insurance policies. Having Aflac helped to take away the stress of worrying about how I was going to pay my bills. With the amount of money I got back from Aflac, I was able to pay my bills for six months.

What shocked me so much about Aflac was how speedy they were. Within four days, the check was on its way to me.

My Aflac insurance agent, Debbie Carter, was able to assist me with my claim. She is an awesome agent. She even called me while I was out on disability just to check on me, asking if I needed anything, if I was OK and if I got my claims processed.

Debra Dobson

Who needs voluntary short-term disability insurance?

The need for disability insurance protection is crucial, particularly among primary wage-earners. Because disabling injuries or illnesses often lead to significant medical bills, anyone who works – whether they are single, married, with children or without – should consider voluntary disability coverage.

Employers should consider adding employee-paid short-term disability coverage to their benefits options because by doing so they’ll give their workers increased peace of mind. Disability insurance helps protect workers from financial ruin with:

  • Benefits that are paid for both total and partial disability.
  • Coverage that’s sold on an individual basis.
  • Available guaranteed-issue options.

Common misconceptions

Although many workers assume they are protected by employer-paid disability coverage, a growing number of companies have cut back on the benefits they offer. A decade ago, it was commonplace for a company’s internal disability plan to pay an employee 70 percent of income if disabled, but workers today usually receive much less.

Furthermore, many people assume they will receive benefits from Social Security or worker’s compensation. However, that is often not the case. Between 2003 and 2012, the percentage of applicants awarded Social Security benefits at the initial claims level was just 24 percent. What’s more, the average monthly Social Security benefit paid to disabled Americans in 2014 was only $1,146.

As for depending on workers’ compensation to cover a disabling injury or illness, employees should consider that 90 percent of disabling accident and illnesses are not work related, meaning workers’ compensation doesn’t cover them.

The bottom line is that weathering an economic recession has opened Americans’ eyes to the value of voluntary short-term disability insurance. Companies and their employees are recognizing the financial vulnerability that comes from being under-protected and underinsured. Neglecting to secure disability insurance is a prime example of how saving a few dollars in the short term can cost thousands in the long run.

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