Did you know that you have a 1 in 4 chance of becoming disabled sometime in your career according to the Social Security Administration? If you were out of work for an extended amount of time, say three months or more, could your family survive without your paycheck?
Most families could not; that’s why we at United Benefits recommend everyone have either an emergency fund and/or a short-term disability policy. Let’s look at each and help you decide which option is best for you.
What is an Emergency Fund?
An emergency fund is simply money you have set aside to cover unexpected expenses. These funds are typically held separately from your primary checking account, such as a money market or savings account. Unexpected expenses could be anything from a car repair bill, uncovered medical charges, or an absence from work. Most financial planners recommend 3-6 months of primary expenses set aside for emergencies.
Short-Term Disability Insurance
A short-term disability policy covers medical absences from work that are expected to last more than two weeks but less than one year. If you cannot work due to an accident or illness, your policy would pay you a monthly benefit up to 65-70% of your gross salary (depending on state law.). You decide the level of coverage you would like, and premiums can be payroll-deducted with a United Benefits plan. Benefits are paid directly to you tax-free and can be coordinated with any sick or annual leave you have accrued.
Which Plan is Right for Me?
So which plan is right for you? First, determine whether you currently have enough liquid savings to cover the essentials for six months: housing, utilities, food, and medicine. If the answer is no, it may be a good idea enroll in a short-term disability plan until you can save enough to cover six months of expenses. It might take a while to save enough for an adequate account, so a short-term disability policy can protect your paycheck while you save. In our experience, many employees decide to keep their policies even after having their emergency fund in place for extra security and peace of mind.
To learn more about the coverage available to you and the applicable rates, fill out the form below and a United Benefits Specialist will get in touch.