Short Term Disability Insurance

Contrary to the associated notions, the term disability refers to any condition that hampers an individual from performing basic tasks they are able to perform normally otherwise. Even a prolonged injury or mental illness can obstruct you from performing your duties, including your job, whether for a short or long duration. Short-term disability insurance plans are designed to protect your financial interests in such situations. By compensating for your lost income during your disability period, these plans prevent the exhaustion of your savings for daily purposes when you are unable to perform your job properly, or at all.

Let’s understand what is short-term disability insurance in detail and other factors related to it. 

What is Short-Term Disability Insurance?

Short-term or long-term disability insurance is a type of insurance plan designed to compensate for the lost income due to a disability. The short-term disability insurance plans provide compensation for a shorter duration generally ranging between 3 months and 1 year. While most available plans offer compensation for up to 6 months, some rare options may go up to 1 year in terms of compensation period. 

The compensation amount of this insurance is paid directly to the insurance holder. Hence, you can easily decide how you would like to spend this amount. Short-term disability insurance is often referred to as short-term disability income insurance. 

Coverage Level of Short-Term Disability Insurance

The coverage level offered by short-term disability insurance plans is one of their biggest selling points. With short-term disability insurance, policyholders can receive compensation ranging up to 70% of their income. The remarkable prospect here is that the coverage level is likely to be decreased if the coverage period of the plan is longer. For instance, you may get only 60% of your lost income covered if the plan offers compensation for up to a year. 

Both the coverage period and the coverage level of short-term disability plans depend on the insurance provider in consideration. 

Long-Term vs Short-Term Disability Insurance

As mentioned in the previous section, two types of disability insurance plans are available in UAE – long and short term. Although both these variants are the same in their basic forms, the only noticeable difference between the two is the period for which the compensation is provided and the offered level of coverage. Whereas short-term disability insurance plans only offer compensation for up to a year, long-term plans may offer these benefits for up to 20 years or even until your retirement. 

As the period of providing compensation is shorter with short-term disability insurance plans, the provided coverage is higher with these plans. The policyholder can generally get up to 70% of their lost income compensated with short-term disability insurance plans. On the other hand, since long-term disability insurance plans offer compensation for a longer duration, they generally offer comparatively lower coverage. Coverage level in case of long-term disability insurance may range from 40% to 70% of the lost income. 

What is the Elimination Period?

An elimination period in a short-term disability insurance plan can be described as the waiting period before the plan starts covering your loss of income due to the disability. The elimination period, differing for each provider, is generally ranged around 90 days. It begins when the policyholder faces a serious injury and ends as per the guidelines and terms of the policy. 

Thus, you can define the elimination period as the duration between the occurrence of the injury or the disability and the day when the policy starts to pay up the benefits. It applies to both long-term and short-term disability insurance plans. 

Who Needs Short-Term Disability Insurance?

Given below are some situations where you can consider taking short-term disability insurance:

• Short-term disability insurance plans are often provided by employers as an on-job benefit, meaning that you may either get them for free or for a nominal premium contribution. If your company is providing such a plan, you can consider taking this insurance coverage as taking precautions is better than handling an emergency without any resources on hand. 
• You can take short-term disability insurance if you are currently employed in a high-paying yet volatile job where it will be difficult to cover the loss of income with your emergency funds. 
• Short-term disability plans are beneficial if you are the sole earning individual of your family and have several people depending on your income alone for survival. 
• If you have been unable to create a substantial emergency fund with your savings, a short-term disability insurance plan can be helpful. 
• Self-employed individuals should also consider taking short-term disability insurance plans as they do not have the luxury of employer-provided plans. This can include doctors running their own clinics, business owners, etc. 

How Can I Get Short-Term Disability Insurance?

There are several ways to get short-term disability insurance plans in the UAE. Given below is a description of all the notable ones:

Purchase with Policybazaar UAE 

The easiest way to compare and buy a suitable short-term insurance plan for yourself is via our website, i.e., policybazaar.ae. Simply fill out the lead form with your basic information and get the list of all suitable plans as per your requirements. You can compare and choose the best available plans from the presented list and move forward to make the purchase. 

Fill out the application form and attach the necessary documents as specified for the plan. Pay the premium amount and finalise your purchase. Your policy documents will be sent to your registered email ID. 

From the Provider Website 

Another way to buy your short-term disability insurance plans is via the provider's website itself. However, you will have to pick the provider as well as the plan before you can start applying in this mode. Consequently, the steps related to comparison and making a choice have to be completed before you visit the provider's website for purchasing the plan. 

Once you have selected a plan for purchasing, head to the provider website, open the short-term disability section, and head to the application portal for the plan of your choice. Fill out the form, attach the required documents, and finalise your purchase by paying the premium. Similar to the previous method, you will receive your policy documents on your registered email ID. 

Opt for Offline Sources

You can also go with the conventional method and choose to buy your short-term disability insurance plan from offline sources like a branch office of your provider or through your insurance agent. Connect with a nearby branch office and make a visit to get an application form. You can also ask your insurance agent to get this form for you. 

Fill out the form and submit it with all the required documents. Pay the premium and finalise your offline purchase. The policy documents will be sent via post to your residence place in the UAE. The coverage will start once your application has been approved and policy documents have been drawn. 

Get Employer-Provided Insurance

As mentioned earlier, several employers provide short-term disability insurance in the UAE. You can easily get this insurance from your employer if it is a part of your employee benefits package. Discuss with your human resource manager or your supervisor to get details about your employee benefits package and whether you can get it for free or for some charges. Complete the formalities involved and start your coverage. 

How Much Will a Short Term Disability Insurance Cost?

Term insurance plans can generally cost you somewhere around 1% to 3% of your income currently. The pricing standards may differ for each provider based on the provided coverage level and period of the plan. Additionally, the elimination period may also make a difference in the premium amount to be paid for your short-term disability insurance plan. If your employee benefits package includes short-term disability insurance, which most packages do, you may be able to get short-term disability insurance at negligible prices. 

Key Takeaways

• Short-term disability insurance plans are made to protect your financial interest by compensating for your lost income while you recover from your injury or disability. 
• Short-term disability insurance plans generally offer coverage for a duration ranging between 3 months and 1 year. Most providers only offer a maximum of 6-month long coverage. However, some rare plans may compensate you for up to 1 year. 
• You can get up to 70% of your income covered with a short-term disability insurance plan. 
• Several employers in the UAE offer this type of insurance as a part of their employee benefits package. 

You should consider having an individual short-term disability insurance plan if you are self-employed, have a high-paying job, don’t have sufficient emergency funds, or are the sole breadwinner of your family.