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Report: On unpaid maternity leave & without disability insurance, expecting mothers face financial trouble

The results of unpaid maternity leave without disability insurance? Debt, delayed financial goals, and concerns about childhood development, according to a new Breeze survey of 1,000 women recently on unpaid maternity leave.

Pew Research found 82% of Americans believe mothers should receive paid maternity leave following the birth or adoption of their child.

In reality, the most recent data from the U.S. Bureau of Labor Statistics reported just 17% of all U.S. workers have access to paid maternity or paternity leave.

Zenefits, a human resources technology company, notes this disparity is uniquely American:

The United States is the only developed nation that does not mandate paid maternity leave. In some countries, like Finland, new moms are paid for up to three years after the birth of their child. In the UK, they can receive up to 39 weeks of paid maternity leave. In the US, it’s estimated only 16% of private-industry workers have access to any type of paid maternity leave.

As a result, the vast majority of expectant mothers take unpaid maternity leave; on average, they take 10 weeks.

That's two and a half months without income at a time when newborn expenses can quickly approach five figures between medical visits, diapers, and formula.

Financially, how do women get by during this time? Do they turn to short term disability insurance? Emergency savings? Credit card debt? What impact does unpaid maternity leave have on long-term personal finance goals and child development?

To find out, Breeze surveyed 1,000 American women who went on unpaid maternity leave at some point during the last year. Here’s what we learned.

There's a lack of consumer knowledge on disability insurance, especially relating to pregnancy & maternity leave

Respondents were segmented down two different survey paths based on how they answered the first question: "Prior to your pregnancy, did you take out a short term disability insurance policy in preparation to go on unpaid maternity leave after eventually giving birth?"

40% of women answered "yes," 35% answered "no," and 25% opted not to answer.

We'll start with the 35% that did not take out short term disability insurance prior to their pregnancy and eventual time on unpaid maternity leave.

Why didn't they take out a disability insurance policy?

While the plurality of respondents (33%) plainly said they "knew nothing about disability insurance," 21% gave a more interesting answer.

This group applied for short-term disability insurance after becoming pregnant, only to find out their pregnancy would be counted as a pre-existing condition that couldn't trigger a benefits payout.

Tip: If you're anticipating unpaid maternity leave and want to use a short term disability insurance policy to replace your temporary loss of income, you need to be proactive. Plan ahead and apply before your pregnancy, so it is not considered a pre-existing condition.

It's clear there's limited knowledge when it comes to disability insurance, and it's preventing some consumers from utilizing the product to protect their income while on unpaid leave.

Whatever the reason was for not getting short term disability insurance coverage, the lack of replacement income from such a policy had many mothers resorting to more drastic financial measures to cover costs while on unpaid maternity leave.

Without disability insurance, most mothers on unpaid maternity leave turn to debt & delay financial goals

Knowing both the percentage of expecting mothers that don't get short term disability insurance and the reasons they don't get it, let's take a look at the subsequent financial impacts:

Just 11% of applicable women indicated they budgeted for unpaid maternity leave so they could handle expenses comfortably. Count Marissa LaBuz, a mom of three, as one of them:

While on unpaid maternity leave, I used finances that I previously saved before giving birth. I knew I would be going on an unpaid leave so we planned to save as much as possible before then. Luckily, it was during the pandemic which enabled us to eat out at restaurants less and spend less money doing day-to-day activities.

But for the vast majority of mothers, unpaid maternity leave without income protection via short term disability insurance meant turning to things like emergency savings (20%), credit card debt (17%), side-jobs (11%), or personal loans (9%).

Meg Schiraldi, a mother of two, cut back on unnecessary expenses while turning to their credit card if any unexpected bills came up:

My husband is a stay-at-home dad, so we wouldn't have any money coming in for six weeks without my paycheck! To start, my husband and I planned out how much we'd need over the 12 weeks, including our house payment, utilities, groceries, and baby supplies like diapers. And, we decided that if any unexpected expenses came up during maternity leave, we'd pay for them on our credit card and pay them off once I started getting paid again.

Next, we cut back on buying things we didn't need. My husband and I put off purchases that could wait and saved the money. For example, we went out to eat as little as possible and stopped buying new clothes if we didn't need them.

With personal finances, day-to-day transactions impact larger, longer-term financial goals.

As evident by the second tab in the graphic found above, this is all too true for mothers who must face unpaid maternity leave without short term disability insurance.

When asked to select all financial goals that were negatively impacted by going on unpaid maternity leave without disability insurance, some eye-catching results included:

  • 35% delayed paying off other forms of debt
  • 34% delayed paying off student loan debt
  • 32% delayed buying a home
  • 32% delayed building a savings fund
  • 29% delayed buying a car

For mothers who took out disability insurance before unpaid maternity leave, most found adequate financial coverage

As mentioned earlier, respondents were segmented at the first question based on whether or not they took out short term disability insurance prior to pregnancy and unpaid maternity leave.

Let's spend a little time looking at the 40% of expecting mothers who did take out short term disability insurance.

Did their disability insurance provide adequate financial coverage during unpaid maternity leave?

65% of women who prepared for pregnancy and unpaid maternity leave by taking out a short term disability insurance policy indicated that it provided them with adequate financial coverage.

And amongst the women who did take out short term disability insurance before their pregnancy, here’s what the average policy looked like:

  • Average Monthly Premium: $94.07 (Median: $89.00)
  • Average Percentage of Monthly Income Replaced: 50.25% (Median: 46.00%)
  • Average Benefit Period: 3.38 months (Median: 3.00 months)

If they could do it all over again...

If you're preparing for pregnancy and motherhood, now is probably the time you're asking yourself something like this:

Should I get short term disability insurance to prepare for pregnancy and unpaid maternity leave or what?

To help you answer that, we first asked the women who took out a short term disability insurance policy if they would recommend it to other women.

We then asked both the women who took out a policy and the women who did not take out a policy if they would take out short term disability insurance the next time around.

Based on these results from women with first-hand experience, taking out a short term disability insurance policy to prepare for unpaid maternity leave can be a prudent financial move.

The impact of unpaid maternity leave on child development

For mothers who took out a short term disability insurance policy in advance of pregnancy and unpaid maternity leave, our data found only 50% of their monthly income was replaced on average.

23% of applicable respondents indicated this wasn't adequate financial coverage. Amongst this group, 20% dug into emergency savings to cover additional expenses even with disability insurance, while 13% took on credit card debt, and 12% took out a personal loan.

Depending on your circumstances, short term disability insurance may not be enough to fully cover the costs of unpaid maternity leave.

And because of this, some mothers return to work sooner than they would like.

65% of survey respondents who took out a disability insurance policy to prepare for pregnancy and unpaid maternity leave indicated they returned to work sooner than they would have liked due to financial reasons, while 22% did not, and 13% opted not to say.

For respondents without short term disability insurance, 51% returned to work sooner than they would have liked, while 29% did not, and 20% opted not to say.

We asked both groups of respondents that returned to work sooner than preferred if they are concerned this will impact the development of their children.

In both cohorts, more mothers are concerned about the impact a shortened maternity leave time will have on the development of their children than those that aren't.

But bills don't stop. and paid maternity leave is hard to come by in the U.S., so most mothers simply don't have a choice.

Tips for handling maternity leave & disability insurance

  • Understand maternity leave options offered to you: Knowing your specific maternity leave situation, including how long maternity leave will last, depends on where you work and live. Under the federal Family and Medical Leave Act (FMLA), all employees of companies having 50 or more employees are eligible for 12 weeks of unpaid leave each year for the birth of a child.

    Certain states then have their own family leave laws, some of which include paid family leave policies; click the link you see above to see family leave details for your state. And if you're unsure if your employer offers unpaid or paid leave (or anything at all), just ask the HR department or talk to your boss directly!

  • If you want disability insurance, prepare ahead of time: If you are considering disability insurance to prepare for unpaid maternity leave, you're most likely going to be looking at short term disability insurance. To get disability insurance for pregnancy, we put together an excellent guide that will answer your questions and help you find the income protection you deserve: How to get disability insurance for pregnancy
  • Know your insurance options for other pregnancy costs: There are different types of insurance for pregnant women that cover certain aspects of pregnancy. For example, some health insurance plans have more robust offerings for pregnant women that will cover all pregnancy costs. Then there is hospital insurance that can cover hospital admission costs. There are other products to consider as well, like a health savings account (HSA), that allows you to deposit money tax-free to be used later for qualified medical expenses pertaining to your pregnancy and related costs.

Learn More: Short Term Disability vs. FMLA

Methodology

All data found within this report derives from a survey commissioned by Breeze and conducted online by survey platform Pollfish. In total, 1,000 adult American women were surveyed. To qualify for the survey, each female respondent had to have went on unpaid maternity leave offered by their employer or the government at some point during the last year (July 2020 to July 2021) due to pregnancy and giving birth. The appropriate respondents were found via Pollfish’s age & gender filtering features, in addition to a screener question. This survey was conducted over a four-day span, starting on July 12th, 2021, and ending on July 15th, 2021. All respondents were asked to answer all questions truthfully and to the best of their abilities.

Full survey results

Note: Some answers won't add up to exactly 100% due to rounding.

1. Prior to your pregnancy, did you take out a short term disability insurance policy in preparation to go on unpaid maternity leave after eventually giving birth?

  • 40% answered "yes"
  • 35% answered "no"
  • 25% answered "I'd rather not say."

2. (Asked only to those who answered "yes" to Q1) Was your short term disability insurance policy offered through your employer?

  • 65% answered "yes"
  • 22% answered "no"
  • 13% answered "I'd rather not say."

3. (Asked only to those who answered "yes" to Q1) How much was your monthly premium for the short term disability insurance policy?

  • Average Monthly Premium: $94.07 (Median: $89.00)

4. (Asked only to those who answered "yes" to Q1) Were you able to comfortably afford your monthly premium costs for your short term disability insurance policy out-of-pocket?

  • 55% answered "yes"
  • 15% answered "no"
  • 23% answered "My employer paid for all of it."
  • 7% answered "I'd rather not say."

5. (Asked only to those who answered "yes" to Q1 & "no" to Q4) How did you pay for your monthly premium costs for your short term disability insurance policy?

  • 20% answered "I had to take on credit card debt."
  • 27% answered "I had to take out a personal loan."
  • 13% answered "I had to dig into emergency savings."
  • 5% answered "I had to take on another job."
  • 25% answered "My spouse/partner covered the expenses."
  • 10% answered "Other/I'd rather not say."

6. (Asked only to those who answered "yes" to Q1) What percentage of your monthly income did your short term disability insurance policy replace?

  • Average Percentage of Monthly Income Replaced: 50.25% (Median: 46.00%)

7. (Asked only to those who answered "yes" to Q1) How long was the benefit period on your short term disability insurance policy?

  • Average Benefit Period: 3.38 months (Median: 3.00 months)

8. (Asked only to those who answered "yes" to Q1) Did your short term disability insurance policy provide adequate financial coverage during your pregnancy/after giving birth?

  • 65% answered "yes"
  • 23% answered "no"
  • 12% answered "I'd rather not say."

9. (Asked only to those who answered "yes" to Q1 & "no" to Q8) Why did your short term disability insurance policy not provide adequate financial coverage?

  • 17% answered "I started unpaid maternity leave before giving birth & needed money during that time, but my benefits did not kick in until after I gave birth."
  • 17% answered "I had complications after giving birth (i.e. postpartum depression) that kept me on unpaid maternity leave for longer than expected & my benefits did not cover the extra time/complications."
  • 21% answered "I did not have any complications, but my benefits period was shorter than the unpaid maternity leave time I took."
  • 37% answered "The monthly benefit amount was simply not enough to cover living expenses while on unpaid maternity leave."
  • 7% answered "Other/I'd rather not say."

10. (Asked only to those who answered "yes" to Q1 & "no" to Q8) As a result of inadequate financial coverage from your short term disability insurance policy, how did you cover additional expenses?

  • 13% answered "I had to take on credit card debt."
  • 12% answered "I had to take out a personal loan."
  • 20% answered "I had to dig into emergency savings."
  • 12% answered "I had to take on another job."
  • 24% answered "My spouse/partner covered the expenses."
  • 15% answered "I budgeted for it ahead of time and was able to pay for it comfortably."
  • 4% answered "Other/I'd rather not say."

11. (Asked only to those who answered "yes" to Q1) For other working women who are planning on pregnancy/giving birth, would you recommend taking out a short term disability insurance plan in preparation?

  • 60% answered "Yes, the replacement income helped me in a lot of ways."
  • 12% answered "yes, other"
  • 10% answered "No, the replacement income is not worth the premium cost."
  • 7% answered "no, other"
  • 11% answered "Not sure/I'd rather not say."

12. (Asked only to those who answered "yes" to Q1) Even with a short term disability insurance policy, did you return to work sooner than you would have liked due to financial reasons?

  • 65% answered "yes"
  • 22% answered "no"
  • 13% answered "I'd rather not say."

13. (Asked only to those who answered "yes" to Q1 & "yes" to Q12) Are you worried this shortened maternity leave time will have an impact on the development of your child?

  • 62% answered "yes, extremely"
  • 21% answered "yes, somewhat"
  • 7% answered "not sure"
  • 3% answered "no, not really"
  • 3% answered "no, not at all"
  • 3% answered "I'd rather not say."

14. (Asked only to those who answered "no" to Q1) Why did you not take out a short term disability insurance policy in preparation for pregnancy and unpaid maternity leave?

  • 33% answered "I knew nothing about disability insurance."
  • 21% answered "I tried applying once I was already pregnant and learned my pregnancy would be counted as a pre-existing condition and not be eligible for disability insurance benefits."
  • 16% answered "I thought I'd be automatically eligible for paid maternity leave through the government or my employer."
  • 16% answered "I did not think it would be necessary."
  • 14% answered "Other/I'd rather not say."

15. (Asked only to those who answered "no" to Q1) How did you cover expenses after going on unpaid maternity leave without short term disability insurance?

  • 17% answered "I took on credit card debt."
  • 9% answered "I took out a personal loan."
  • 20% answered "I dug into emergency savings."
  • 21% answered "My spouse/partner covered the expenses."
  • 11% answered "I took on a side-job that I could do while being on maternity leave."
  • 11% answered "I budgeted for it ahead of time and was able to pay for it comfortably."
  • 11% answered "Other/I'd rather not say."

16. (Asked only to those who answered "no" to Q1) Has the time spent on unpaid maternity leave set you and/or your spouse/partner back when it comes to any of the following financial milestones? (Select all that apply)

  • 32% answered "buying a home"
  • 15% answered "buying a second home"
  • 34% answered "paying off student loan debt"
  • 35% answered "paying off other forms of debt"
  • 29% answered "buying a car"
  • 22% answered "having another child"
  • 26% answered "building a retirement fund"
  • 32% answered "building a savings fund"
  • 16% answered "buying a pet"
  • 29% answered "going on vacation"
  • 12% answered "No, it has not set me/us back at all"
  • 16% answered "other"

17. (Asked only to those who answered "no" to Q1) Due to being on unpaid maternity leave and not having a short term disability insurance policy, did you have to return to work sooner than you would have liked for financial purposes?

  • 51% answered "yes"
  • 29% answered "no"
  • 20% answered "I'd rather not say."

18. (Asked only to those who answered "no" to Q1 & "yes" to Q17) Are you worried this shortened maternity leave time will have an impact on the development of your child?

  • 17% answered "yes, extremely"
  • 32% answered "yes, somewhat"
  • 20% answered "not sure"
  • 14% answered "no, not really"
  • 9% answered "no, not at all"
  • 8% answered "I'd rather not say."

19. (Asked only to those who answered "yes" or "no" to Q1) After this experience, will you take out a short term disability insurance policy in advance of having another child?

  • 37% answered "yes, definitely"
  • 19% answered "most likely"
  • 14% answered "not sure"
  • 12% answered "most likely not"
  • 8% answered "no, definitely not"
  • 10% answered "I'd rather not say.

20. If you were to begin a new job search, would you give an advantage to any prospective employer that offers paid maternity leave?

  • 57% answered "yes"
  • 23% answered "no"
  • 21% answered "Not sure/I'd rather not say."

21. If you were to begin a new job search, would you give an advantage to any prospective employer that offers a short term disability insurance plan but still has unpaid maternity leave?

  • 49% answered "yes"
  • 28% answered "no"
  • 23% answered "Not sure/I'd rather not say."

22. If you could buy insurance that pays you benefits if your unborn child is born with special needs (down syndrome, cerebral palsy, intellectual disability, etc.), would you?

  • 51% answered "yes"
  • 25% answered "no"
  • 24% answered "not sure/depending on the price"

23. (Asked only to those who answered "yes" or "not sure/depending on the price" to Q22) At what price (monthly premium), would you feel comfortable paying for this type of insurance?

  • Average Preferred Monthly Premium: $85.90 (Median: $80.00)