Temporary Disability Insurance – What Does It Entail?

Temporary Disability Insurance

Many people today become disabled (permanently or temporarily) before they retire, which is why temporary disability insurance should be a vital part of your financial plan.

This type of insurance cover, which is also known as short term disability insurance, is meant to pay a percentage of your salary should you become disabled temporarily and unable to work as a result. A temporary disability policy will provide up to 75 percent of what you earned prior to the accident or illness.

Although the benefits usually last between 3 and 6 months, the benefit period could last up to 2 years, depending on your policy.

When do the benefits start?

Temporary disability insurance benefits could begin as soon as 14 days following an accident that leaves you unable to work. However, in case of an illness that compromises your ability to work for a long period, you will be required to exhaust your allocated sick days before disability insurance kicks in. This is one of the reasons why different policies are offered for short term disability resulting from sickness versus that resulting from an injury. Some insurers also sell accident policies through which you can get monthly payments for a year following an injury or accident.

Most short term disability insurance policies limit the benefit amount per month and the benefit period (period during which you receive benefits). However, you may be eligible for retroactive benefits in case your condition worsens over time. You may also want to know the benefits of having TPD Insurance (Total and Permanent Disability Insurance).


Different temporary disability insurance plans will have different terms of qualification. For instance, you would have to work for your employer for a certain minimum period before you could get such coverage. In addition, you would have to work full-time or at least 30 hours a week, depending on the insurer. More information here about temporary disability insurance plan.

Personal or workplace policy

In most cases, employers pay for temporary disability insurance for their employees, but you could also get a personal policy. Companies can choose to have their employees pay for coverage, which would probably come with tax implications for the company. However, individual temporary disability policies are rare. Your best bet would be to buy coverage through your employer or workplace.

Premium payments

When you have a temporary disability insurance cover and become disabled, you would not be required to continue paying your premiums. In addition, the amount of premium that you pay should not change unless it is also adjusted for everyone in your class. The policy could last until 65 or even 70 years of age, but this would depend on your company or employer’s approval. Read: Why Internet Insurance Leads Suck

Losing one paycheck can be a difficult experience, but when an accident or illness prevents you from earning a living for months on end, this could easily turn into a financial disaster. Short term disability insurance ensures that you won’t have to cut down on the basics like food, clothing, transportation and housing since you can replace some of the income lost. When taking out an individual temporary disability insurance policy, it is important to take the time to decide on the insurance package that would best suit your needs.