| California short term disability insurance (California SDI) | | | | You may have a mortgage, rent, car payment(s), |
| pays the richest benefit of any of the state programs. | | | | student loan payments, credit card debt, insurance |
| Does that mean you are fully protected in case you | | | | payments, etc. All of these bills stay the same; |
| become disabled? While it's great to have, you may | | | | whether you are working or disabled. If you are |
| regret not increasing your coverage level should you | | | | currently spending most of what you make, and have |
| suffer a disabling injury, illness, or go out on maternity | | | | little in savings, what will you do when your pay is cut |
| leave. | | | | by 45%? |
| Only five states have mandated short term disability | | | | This is how people get themselves into financial trouble. |
| programs in force, and California's program pays the | | | | They live on the edge financially, and everything is fine |
| highest benefits by far. California SDI replaces up to | | | | as long as they are healthy and working. But people |
| 55% of your income, up to a cap of $987 per week | | | | do get sick, and have accidents. Roughly one third of |
| as of January, 2010. While other state plans replace a | | | | workers will suffer a disabling accident and/or illness |
| higher percentage of income, their weekly cap is much | | | | during their lifetime. With very little money in savings, |
| lower. This means fewer California workers full under | | | | people get pushed over the edge when their income |
| the weekly cap, and actually get to enjoy the full 55% | | | | dries up. Half of all bankruptcies are triggered by health |
| income replacement. | | | | events. |
| Does this mean you should feel secure? Ask yourself | | | | California short term disability insurance is a great |
| this question: "Am I spending most of what I make | | | | program for many workers who become disabled. But |
| every week, or am I banking 45% of what I earn?" If | | | | ask anyone who needed to use the benefit: "was it |
| you are like most people you are spending most of | | | | enough?" The answer will probably be "no". This is |
| what you earn, and you have very little set aside in | | | | especially true for women planning a pregnancy, |
| savings. It is estimated that 60% of American | | | | because she will be out of work for at least six |
| households are living check to check. If you are not | | | | weeks, and longer if she needs to miss work before |
| banking 45% of what you earn, think about this. If you | | | | delivery, or take extra time to bond with her baby. |
| become disabled, you will be slapped with a 45% pay | | | | If you are concerned about staying solvent in the |
| cut. | | | | event of a disability, consider purchasing supplemental |
| And people with higher incomes fall into the same trap. | | | | short term disability insurance while you are still healthy, |
| Many times expenses rise right along with income. | | | | and before getting pregnant. These policies will pay an |
| Anyone earning more than $93,316 annually will be | | | | additional benefit should you become disabled, and help |
| subject to the cap. This means the pay cut will be | | | | close the gap in your California short term disability |
| more than 55%. | | | | insurance coverage. |
| Furthermore, much of your spending may be fixed. | | | | |