What are the differences between short-term and long-term disability insurance, and why might you need both?
Long-Term vs. Short-Term Disability Insurance at a Glance
If you rely on your income to cover everyday expenses, how long could your savings realistically support you without a paycheck? While many employers offer disability insurance to cover short absences from work, far fewer provide coverage that lasts beyond a few weeks or months.
There are two primary types of disability insurance: short-term disability (STD) and long-term disability (LTD). Each serves a different purpose, has different eligibility requirements, and provides income replacement for different lengths of time. Both are designed to replace a portion of your regular income if you’re unable to work due to illness or injury.
Short-Term vs. Long-Term Disability: What’s the Difference?
Short-term disability (STD) provides income replacement if you’re temporarily unable to work and have exhausted your sick leave. If you qualify, the policy pays a percentage of your regular income while you recover from a qualifying condition.
To be eligible, you typically must be unable to perform the core duties of your job. STD benefits are designed for brief periods, usually lasting 13 to 26 weeks, depending on the plan. Most policies replace 40% to 60% of your weekly gross income.
Commonly covered situations include extended illness, non-work-related injuries, or recovery after childbirth. If your injury occurs on the job, coverage usually falls under workers’ compensation instead, and STD benefits typically won’t apply during that period.
Long-term disability (LTD) coverage generally begins when short-term benefits end, often around 3 to 6 months after the onset of disability. These policies include an elimination period—commonly 90 or 180 days—before benefits start.
Once active, LTD benefits may continue until you’re able to return to work or reach your Social Security retirement age, depending on the policy. LTD is intended to protect your income against serious or chronic conditions that may affect your ability to work for years, such as cancer, major injuries, mental health disorders, arthritis, back problems, or cardiovascular conditions like heart disease or stroke.
Why Disability Insurance Matters
No one plans to become disabled, but having coverage can make a significant difference if the unexpected happens. Statistically, more than one in four people in their twenties will experience a disability that prevents them from working for at least 90 days.
While building an emergency fund is an important financial safety net, savings alone may not be enough to cover extended periods without income. Disability insurance can help support you—and anyone who depends on your income—especially in long-term situations where self-insurance may fall short.
How to Get Short-Term and Long-Term Disability Insurance
Many employers offer disability insurance as part of their benefits package. Enrollment typically happens during onboarding or open enrollment, and in some cases employers may cover part or all of the premium cost.
Employers in California, New Jersey, Hawaii, New York, and Rhode Island are required to provide at least short-term disability coverage.
Even if your employer doesn’t fully pay for coverage, disability insurance is often available as a voluntary benefit. Group plans through employers are frequently more affordable than individual policies due to group pricing and negotiated rates.
If employer-sponsored coverage isn’t available, professional associations sometimes offer group disability insurance to members. You can also purchase an individual policy through an insurance provider, though individual plans are more commonly long-term rather than short-term.
If you’re buying coverage on your own, working with an insurance professional can help you evaluate your options and choose coverage that fits your needs. Some people also supplement employer-provided coverage with an individual policy, especially if workplace benefits have caps that limit how much income is replaced.
How Disability Insurance Pricing Is Determined
The cost of disability insurance depends on several factors. Jobs with higher physical risk—such as firefighting, mechanical work, or heavy machinery operation—typically come with higher premiums than office-based roles.
Age and health also play a role; premiums generally increase as you get older. Gender can factor into pricing as well, since women statistically file more disability claims on average. Income level matters too—higher income usually means higher premiums because there’s more income to protect.
On average, disability insurance premiums range from 1% to 3% of your annual income. Policy features also affect cost. Plans that offer longer benefit periods or higher income replacement percentages typically cost more.
Disability Insurance: Key Takeaways
- Short-term disability coverage usually begins after sick leave is exhausted and lasts up to about 26 weeks
- Long-term disability coverage often begins after 90–180 days and may last until retirement age
- Disability insurance helps protect your income if illness or injury prevents you from working
- Coverage is often available through employers, professional associations, or individual policies
- Premiums vary based on income, age, health, occupation, and policy features
- While some view disability insurance as unnecessary if unused, those who need it often find it invaluable
