Personal Finance

Short term disability/income protection insurance

  • Last Updated:
  • Jan 20th, 2013 2:08 pm
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[OP]
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May 27, 2007
379 posts
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Short term disability/income protection insurance

I'm thinking of buying this type of insurance. I have Long Term Disability insurance from work, but it doesn't kick in for 13 weeks. So, in the mean time, I'd have to go on unpaid leave. Just wondering if anybody here has this type of insurance and if you have any tips in shopping for it. Thanks.
6 replies
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Sep 15, 2009
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Group LTD is usually crap with many limitations. Look at a separate long term LTD policy with a 30 day wait period, designed to offset and or top up your group LTD.

STD usually has wait times from 1 to 14 days before you can claim. Sick pay/leave by the employer is usually relied on first before the STD will kick in. This creates a grey area in many cases. Is it worth it to purchase? No in my opinion based on the above factors as well as the associated cost and the fact that you can qualify for EI in the short term.

If you have a correct LTD plan, that's the most important thing. Either set up an emergency fund of 1-3 months or open a line of credit that will be used only in the above case until the LTD kicks in.

I'm amazed at home many people don't understand their long term disability benefits (I'm not saying you don't) considering how important it can be. Like I mentioned previously, there are usually many flaws with group plans from maximums to limited claim periods to suspect qualifications.
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[OP]
Member
May 27, 2007
379 posts
22 upvotes
wesboag wrote:
Jan 19th, 2013 9:59 am
Group LTD is usually crap with many limitations. Look at a separate long term LTD policy with a 30 day wait period, designed to offset and or top up your group LTD.

STD usually has wait times from 1 to 14 days before you can claim. Sick pay/leave by the employer is usually relied on first before the STD will kick in. This creates a grey area in many cases. Is it worth it to purchase? No in my opinion based on the above factors as well as the associated cost and the fact that you can qualify for EI in the short term.

If you have a correct LTD plan, that's the most important thing. Either set up an emergency fund of 1-3 months or open a line of credit that will be used only in the above case until the LTD kicks in.

I'm amazed at home many people don't understand their long term disability benefits (I'm not saying you don't) considering how important it can be. Like I mentioned previously, there are usually many flaws with group plans from maximums to limited claim periods to suspect qualifications.
Thanks for the reply.

I work for the federal government so I have the standard LTD package. Not sure how good it is - I will have to review to figure that out later. At the moment, I'm just thinking about STD because I don't have any at all. Like I said, I'm not covered by LTD for the first 13 weeks. I can use sick days, but since we accrue them at 3 weeks a year so it will take a few years to cover it. I have both a LOC and savings to cover 3 months, but I would just prefer to be covered versus liquidating my assets.
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Mar 20, 2009
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1. EI will cover you up to when your LTD kicks as long as you hustle to get your application in promptly (2 week waiting period, and you have to wait 4 weeks for the 1st payment). That's why most organizations don't bother with short-term disability insurance, and LTD is timed to kick in when EI ends.

2. Short term disability insurance is never really a smart buy. Any insurance company will carefully calculate the chances of you needing this and the likely payout, then charge you 2x as much to make their profit. Most people can afford to self-insure, especially given the option of EI that you already pay for.
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May 2, 2012
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Ottawa
The public service LTD through Sun Life is actually quite good.

When I last looked at the plan with a Sun Life rep they didn't even recommend supplementary coverage, which you'd think they would being the seller.

Consider building an emergency fund to fill the gap between short term sick leave and longer term disability coverage.
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Any LTD that decreases from regular occupation (which is typically called own occupation in group plans) to any occupation after x amount of years is not good coverage. Also look at your maximum claim amount, indexation, etc.
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Nov 12, 2003
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If you have LTD from your work, check one more time - you might STD as well.
In my case STD is provided to everybody and is paid by employer, LTD is optional and is paid by employee. Maybe you don't see deductions and consider it's not provided?
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