Short-Term Vs Long-Term Disability

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

What is Short-Term Disability Insurance?

Short-Term Disability (STD) Insurance provides financial assistance to individuals who are unable to work due to a temporary illness or injury. It typically covers a portion of the employee’s salary for a short period.

  • Coverage Duration: Usually ranges from a few weeks to a year.
  • Benefit Amount: Often 40-70% of the regular income.
  • Waiting Period: Short, generally 1-14 days from the onset of disability.
Short Term Disability Vs Long Term Disability

What is Long-Term Disability Insurance?

Long-Term Disability (LTD) Insurance offers financial support for an extended period when an individual is unable to work due to a long-lasting illness or injury.

  • Coverage Duration: This can extend from a few years to retirement age.
  • Benefit Amount: Usually about 50-70% of the regular income.
  • Waiting Period: Longer, often several weeks to several months.

Key Differences

AspectShort-Term DisabilityLong-Term Disability
Duration of BenefitsWeeks to 1 yearSeveral years to retirement
Waiting Period1-14 daysSeveral weeks to months
Coverage Percentage40-70% of income50-70% of income
PurposeFor temporary disabilitiesFor long-term or permanent disabilities

Importance of Both in Financial Planning

  • Protection of Income: Both types provide income protection but for different durations and degrees of disability.
  • Coverage Gaps: STD can cover the waiting period before LTD benefits begin.
  • Comprehensive Protection: Having both ensures continuous coverage regardless of the disability duration.

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Short Term Vs Long Term Disability


Understanding the differences between Short-Term and Long-Term Disability Insurance is crucial for effective financial planning. While STD covers immediate, temporary needs, LTD is essential for longer-lasting disabilities. Together, they provide comprehensive income protection.

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Questions From Our Readers

Should I pick long-term or short-term disability?

The choice between long-term and short-term disability insurance depends on your personal needs, financial situation, and job security. Short-term disability covers a brief period after illness or injury, while long-term disability covers extended periods, even until retirement. Consult with a financial advisor for personalized advice.

Should I do both short-term and long-term disability?

Having both short-term and long-term disability insurance can provide comprehensive coverage. Short-term disability can cover immediate needs following a sudden illness or injury, while long-term disability ensures protection if you cannot work for an extended period. Your personal circumstances and budget will guide your decision.

What’s the difference between long-term and short-term?

Short-term disability insurance typically provides benefits for up to six months following an illness or injury, covering a portion of your income. Long-term disability insurance, however, begins after short-term coverage ends and can last years or until retirement.

What is considered to be a permanent disability?

A permanent disability is considered any physical or mental condition that prevents a person from performing substantial gainful work for a year or more or is expected to result in death. Such conditions are typically irreversible, or they don’t improve with treatment.

What is the difference between state short-term disability and federal long-term disability programs?

State short-term disability programs provide temporary financial assistance to eligible individuals who are unable to work due to a non-work-related illness or injury. The coverage period is typically limited, often ranging from a few weeks to a year, and is designed to cover immediate, short-term needs. On the other hand, federal long-term disability programs, like Social Security Disability Insurance (SSDI), are intended for individuals who have a long-term or permanent disability that prevents them from working for a year or more or is expected to result in death. SSDI benefits are based on the disabled person’s prior work history and payroll tax contributions. The application process for SSDI is usually more stringent, and it can take longer to start receiving benefits compared to state short-term disability programs.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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