Short-term versus long-term disability insurance

Many employers offer short-term disability for minimal cost. The insured individual receives benefits (often 80% of gross monthly income) for a limited time (often 90 days) following a short waiting period (often 14 days). Benefits are paid following serious illness, disabling injury or child birth and continue until the coverage limit is exhausted, the specified time passes or the individual returns to work.

A serious illness or injury may exceed the short-term disability coverage period. Social Security Disability or worker's compensation benefits may be available but are typically less than current earnings. Long-term disability insurance addresses this gap. Employers may offer long term disability insurance. Individual products are also available.

Long-term insurance benefits (often 60% of gross monthly income) begin after a waiting period (often 90 days) for a specific time (ranging from 2 years to retirement age). Serious illness or injury initiates benefits, but not childbirth. The policy's elimination period refers to wait time before benefits begin. A short elimination period costs more. Also, long term disability policies can be own-occupation or any-occupation. This factor determines if benefits are paid for being unable to perform the duties of a job aligned with your education and experience versus any job. Benefit period (how long benefits continue) and coverage amount affect pricing as well as age, health status, occupation and extra policy features.