Disability insurance replaces your income and covers your expenses if you’re hurt or sick and can’t work. There are two basic types of disability insurance policies: short-term or long-term disability insurance.
The main difference between short-term and long-term disability insurance is how long the payments last, but there are other differences too.
Short-term disability insurance | Long-term disability insurance | |
|---|---|---|
Benefit period | 3-6 months | 1, 2, 5, 10 years, or until retirement |
Elimination period | Less than 14 days | 30-720 days; Recommended 90 days |
Coverage amount | Up to 80% gross monthly income | Up to 60% gross monthly income |
Average cost | 1-3% of annual salary | 1-3% of annual salary |
Where to buy | Typically employer-sponsored | Private policies available from carriers; employer-sponsored |
What’s the difference between short-term and long-term disability insurance?
Short-term and long-term disability insurance have different benefit periods, which just means that the payments last for different lengths of time.
Short-term disability insurance usually has a benefit period of three to six months, but sometimes it can last up to a year. You won't receive benefits past your policy’s benefit period, even if you’re still unable to work.
Long-term disability insurance has longer and more flexible benefit periods. You can choose to get long-term disability benefits for one, two, three, five, or ten years, or all the way up until you retire (usually up to age 65 to 70).
When do short and long-term disability insurance start?
Short-term and long-term disability insurance also have different elimination periods, which means the time you have to wait after you’re sick or injured before your benefits start.
You usually have to wait a couple of weeks before short-term benefits start, but a long-term policy usually won’t pay any benefits for between 30 days and two years after you’re initially disabled.
You choose your policy’s elimination period when you apply for disability insurance. Choosing a longer waiting period makes your premiums cheaper, but it also means having to rely on savings or other income for longer while you’re waiting for your disability insurance payments to start.
Coverage from short-term vs. long-term disability insurance
Both short-term and long-term disability insurance can cover most of your income. Your benefits aren’t taxed unless you paid for your policy with pre-tax dollars (which may be the case with short-term disability insurance you get through work).
Disability insurance usually covers about 60% of your income, regardless of type, but there’s a good chance your benefits will come close to what you take home after taxes. Having both short-term and long-term disability means you ’ll have even more protection, for both the weeks and months immediately following an illness or injury and for the long-term.
Short-term vs. long-term disability coverage: riders
You can add extra coverage, called riders, to many disability insurance policies. Popular long-term riders include automatic cost of living adjustments, which increase your payments as inflation goes up, guaranteed coverage and fixed rates, survivor benefits for your loved ones, and more.
Short-term disability riders are less common, but they do exist. One popular short-term rider you can add is for post-pregnancy coverage.
Adding riders to a disability policy can make your rates more expensive, but riders can ensure you’re fully protected and get the most out of your disability insurance policy.
→ Read more about disability insurance riders
Cost of short-term and long-term disability insurance
Both short-term and long-term disability insurance usually cost about 1% to 3% of your salary, though the cost of coverage changes when you add riders or adjust your benefits and waiting periods.
There’s not much difference in the cost of short and long-term disability insurance, but long-term disability is the better deal. Even though it can be the same price, you get far more coverage out of long-term insurance.
That said, you may get short-term disability insurance for much cheaper (or even for free) through an employer’s group plan. If you’ve got the option, having both a short-term group disability policy and an individual long-term disability insurance policy is a good way to have complete protection.
Annual salary | Cost of disability insurance |
|---|---|
$75,000 | $63 to $188 per month |
$100,000 | $83 to $250 per month |
$125,000 | $104 to $313 per month |
$150,000 | $125 to $375 per month |
$175,000 | $146 to $438 per month |
$200,000 | $167 to $500 per month |
$225,000 | $188 to $563 per month |
$250,000 | $208 to $625 per month |
$275,000 | $229 to $688 per month |
$300,000 | $250 to $750 per month |
Should you get short-term or long-term disability insurance?
You should have long-term disability insurance if you have a high-paying job, a specialized career, advanced degrees or training, or dependents who rely on your income. If this sounds like you, long-term disability insurance is the easiest way to replace your income and continue providing for your family if you’re suddenly unable to work.
An own-occupation long-term policy offers the most protection. This policy pays out even if you can still work in a different field, like if you’re a surgeon whose hand is injured but you can still teach. An any-occupation policy is usually cheaper, but that means you’ll only get your benefits if you can’t work in any other role that uses your education and training.
You should get short-term disability insurance to supplement your long-term policy if it’s offered by your employer, especially if it’s free or discounted.
→ Read more about how much disability insurance you might need
Where to get short and long-term disability insurance
You can get disability insurance from your workplace or directly from an insurance company. It’s common to get group short-term disability insurance from your work and buy individual long-term coverage yourself.
Insurance companies that sell short-term disability plans offer discounted group rates to employers, which makes short-term disability insurance a cheap perk to pass along to employees.
Group insurance gives you less control over your benefits and elimination periods; with a private long-term insurance policy all of these details are up to you.
Frequently asked questions
Is short-term disability insurance the same as FMLA?
Short-term disability insurance isn’t the same thing as the Family Medical Leave Act (FMLA). Short-term disability pays you benefits when you can’t work, while FMLA ensures that your job can’t fire you while you’re out if you qualify for protection.
When can you use short-term and long-term disability insurance?
You can use both short and long-term disability insurance when you’re injured or sick and can’t work. Coverage excludes pre-existing conditions, but includes most disabilities, like a back injury after a car accident, chronic fatigue after an illness, complications from pregnancy or childbirth, loss of a limb, or a traumatic brain injury (TBI).
Can you work on disability insurance?
You can work and get disability insurance benefits if you have own-occupation coverage. Own-occupation disability insurance covers you as long as you can’t work the specific job you were trained for, like as a surgeon or lawyer, even if you can have another job.
Can you get both short-term and long-term disability insurance?
Yes, you can get both short-term and long-term disability insurance. They go well together, since the benefits from long-term insurance may not start for at least a year after an injury or illness — which is the max amount of time most short-term policies will cover.
