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Pregnancy Disability Insurance

Author: John Massa

Published: 2008-12-17 : (Rev. 2011-06-13)

Synopsis and Key Points:

Disability insurance can be the answer to a households cash flow due to pregnancy.

Main Digest

Missing work during and after pregnancy has become a common occurrence.

According to a 2002 study, 29% of short term disabilities and 12% of long-term disabilities are due to pregnancy.

Maternity disability can turn what is otherwise a happy occasion into a financially harrowing experience when the mother is left unable to work for months before and/or after delivery. Disability insurance can be the answer to the unknown risk to a household's cash flow due to pregnancy.

Many larger companies offer paid maternity leave to employees whereby the employee is granted full pay for a period of time (generally 3 months) while out of work with the newborn. Any complications that cause the employee to be out before delivery or longer than the benefit period after delivery put the employee into a situation where the household loses that income altogether. Individual short term disability insurance can provide up to 70% of regular income when you're not able to work due to illness or injury for 3-6 months. Long-term disability insurance takes over after the short-term benefits period has passed and can provide income protection for up to five years or longer.

Mothers-to-be often rely on the group disability insurance offered by their employer. Group disability usually covers up to 60% of regular income. However, all benefits received from such a policy are taxed as regular income, lowering take home dollars to roughly 42% of regular income. Group policies are also commonly riddled with exceptions and limitations that can further reduce or eliminate benefits altogether.

Mothers-to-be with group disability insurance can very affordably plug the holes in their policy with a supplemental disability insurance policy. Supplemental coverage can extend income protection to 100% of pre-disability cash flow and benefits paid from the supplemental policy are not taxed as income.

The key to protecting a future mother's income during pregnancy is to get disability insurance, be it individual or supplemental, before becoming pregnant. Once pregnant, the eligibility for additional disability insurance evaporates.

Future moms have several options to protect their income from a long-term or short-term pregnancy disability. Without this coverage, families take the risk of losing a good portion of their income for months, if not longer. Whether you participate in a group plan at work or not, maternity disability can be planned for in an affordable manner to help ensure a truly safe pregnancy where your family's quality of life remains unaffected.

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