Eligibility and Application

Where to Sign Up

You can sign up or apply for Short-Term Disability (STD) Insurance by contacting:

• Your employer’s Human Resources department if your employer offers disability income insurance
• A trade union, alumni organization, or other professional organization you are a member of if they offer group plans
• An insurance agent if you want an individual plan

Group Coverage and Individual Coverage

One way to get STD insurance is through an employer, union, or other professional organization. This type of policy is known as group coverage and is your best option. To get coverage through your employer, you usually need to be working a minimum number of hours per week. This is called the “active work requirement.”

Another option is to purchase individual coverage directly from an insurance company or agent. The main reason for getting an individual policy is if you work for an employer who does not offer any STD policy or the income from the insurance would be insufficient if you did become disabled.

Getting an individual policy is a little more complicated than getting a group policy. You will have to look at different factors before you choose a policy and undergo medical underwriting. You may be denied coverage. These and other issues related to finding and choosing an individual policy are discussed below.

Major Differences in Policies

If you purchase an individual policy, you will pay a monthly premium for your STD insurance. The premium depends on many factors, including your age, your health, the type of work you did when you first signed up for STD, and the length of the waiting period.

If you have a group STD policy, ask your Human Resources department about your plan’s waiting period, coverage amount, and benefits period:

• Waiting Period: Sometimes called the elimination period. This is the period between the start of your disability and when you are paid your benefits. Generally, policies with longer waiting periods are cheaper. Many plans have different waiting periods for different types of disabilities. For example, a plan may have a seven-day waiting period for illnesses and no waiting period for accidents.
• Benefits Rates: Most policies pay about 60% of the income you made prior to becoming disabled. Some policies also change rates during the benefits period. For example, your policy may pay 80% for the first three weeks of disability and then 50% for the remainder of your benefits period. If you get an individual policy, think about how much money you believe you would need to pay for your essential monthly expenses, such as your mortgage payments or rent, food, utilities, and transportation, if you couldn’t work. Remember that if you develop a disability, you may also have additional medical costs. Try to get a plan that you think will cover your expenses.
• Benefits Period: The benefits period is the amount of time that you would get benefits if you became disabled. For STD policies, the benefits period is 12 months or less. If you have an employer-sponsored policy, but you don’t feel it gives you a benefits period that is long enough, you can buy additional coverage. You may want to select a policy to get the longest benefits period that is available. However, the longer the benefits period, the more you will pay in premiums.

If you are applying for an individual plan, make sure you understand the policies different insurers offer.

Medical History and Pre-Existing Conditions

When you sign up for STD insurance, the insurance provider will look at your medical history. Insurers look at your medical history differently, depending on whether you are signing up for group coverage or applying for individual coverage.

Group Coverage

For employer-sponsored coverage, you will be allowed to sign up for the plan during an initial enrollment period. During this period, the insurance company cannot deny you coverage based upon a pre-existing condition, so it is very important to sign up then.

If you have a pre-existing condition when you sign up for your group plan, you may be required to work for a certain period of time before that pre-existing condition is covered by your insurance policy. This period of time is generally between six months and 12 months and is called an exclusionary period.

If you do not sign up during the initial enrollment period, you may have to undergo medical underwriting. The insurance company may review your medical records to find out if you have a pre-existing condition or are getting treatments for a potentially disabling condition. Treatments can include advice from a doctor or a medication. If the insurance company finds that you do have a health condition or have been treated, the insurance company can deny you coverage, exclude conditions from being covered, or have an exclusionary period for your pre-existing conditions.

Similar rules apply to other types of group coverage that are not employment-based (like group policies through a trade union or professional organization). There may be specific periods of enrollment, insurance companies may be able to deny coverage based on health conditions, and there may be exclusionary periods for pre-existing conditions.

Individual Coverage

If you want individual coverage because you do not have access to group coverage or because your group coverage offers small cash benefits or doesn’t give you benefits for long enough if you do become disabled, you will also have to undergo medical underwriting.

The insurance company will review your application and may request and review your medical records to find out if you have a pre-existing condition or are getting treatments (which can include advice from a doctor or a medication) for a potentially disabling condition. If the insurance company decides you do have a health condition or have been treated for one, the insurance company can deny you coverage, exclude conditions from being covered, or have an exclusionary period for your pre-existing conditions.

When to Sign Up

The sooner you sign up for disability income insurance, the better. With employer-sponsored plans, you should sign up during your pre-enrollment period, also called the initial enrollment period. With other group policies, you may have to be a member of the group for a period of time before you can enroll in the plan. Once you become eligible to enroll, sign up as quickly as you can to avoid exclusionary periods or the exclusion of specific conditions.

If you are interested in purchasing an individual policy, you should apply as young as possible. Young people pay lower premiums and if you purchase disability income insurance at a young age, you may be able to get a noncancelable policy, which means that your coverage can’t be canceled. You also may be able to get a policy where your premiums can’t be raised as long as you pay your premiums on time.