Identification

• Disability insurance is insurance that pays for lost wages due to illness or injury. Long-term disability insurance covers any long-term disability and can cover a period of five years up to retirement age. Short-term disability insurance covers short-term disabilities and covers an approximate period of 13 to 26 weeks up to two years. It will cover 100 percent of your income. According to Financial Web, short-term disability insurance is usually the best choice for the self-employed.
  
  

Significance

• If you're self-employed, to qualify for short -term disability insurance, you have to meet certain eligibility requirements. You will have to prove that you generate an income and what that income is. To facilitate this, keep accurate financial records of your earnings. Keep in mind that the policy comes with an initial waiting period, usually around two weeks; therefore, it's important to acquire disability insurance early before anything happens to jeopardize your earning capacity.
  
  

Consideration

• Various private insurers sell short-term disability insurance. Shop around to get quotes and compare prices to see which product will work best for your financial situation. When comparing, note that there are two types of short-term disability policies. A noncancelable policy means the insurance company cannot cancel it except for non-payment of premiums. You can renew each year and your premiums don't increase nor will your benefits decrease. A guaranteed renewable policy means you can renew the policy with the same benefits and not have it canceled by the insurer, but the insurer can raise your premiums as long as it does so for all other policyholders in your rating class.
  
  

Options

• According to the Insurance Information Institute, there are additional options you may consider as add-ons when purchasing a short-term disability insurance policy. A return-of-premium provision requires the insurer to return a portion of your paid premiums if you don't file a claim within a specific period of time. A cost of living adjustment increases your disability payments over time as the cost of living in your area increases as measured by the Consumer Price Index. A waiver-of-premium clause allows you to stop making payments on the policy after you're disabled for 90 days.