Many federal employees take out short-term disability insurance because such coverage is not part of the federal benefits package. When you shop for a disability policy, pay close attention to the definition of disability.
“Own-occ policies” will pay if you are unable to perform your own occupation.
“Any-occ policies” will pay if you are unable to perform any occupation, based on your training or experience. Any-occ insurance is less expensive than own-occ coverage but it’s more difficult to collect disability benefits from an any-occ policy.
Some policies have an own-occ basis for two years and then pay benefits on any-occ basis. In this situation, disability benefits could stop after two years, if you can do some type of work in keeping with your education and career experience.
Some disability policies offer “residual” benefits that will pay you a fractional benefit if you go back to work part-time. Say your disability policy will pay you as much as $5,000 a month and your income has dropped by 40 percent as a result of an injury. If your income has declined by 40 percent, you would receive 40 percent of the coverage amount: $2,000 per month, in this example.