Short Term vs. Long Term Disability Insurance: What’s the Difference?

Life doesn’t always go as planned. An illness or injury can happen at any time, and if it keeps you from working, it can quickly affect your finances. That’s where disability insurance comes in.

There are two main types: short term disability insurance and long term disability insurance. Both are designed to replace part of your income if you can’t work due to a medical condition. But they work differently, and knowing how can help you make smarter choices about your coverage.

What is short term disability insurance?

The bills don’t stop just because you can’t work due to an accident, injury, illness, or pregnancy. Short term disability insurance lets you protect your financial future with coverage that pays a portion of your wages while you work to get well. Your benefits continue until you are no longer disabled or until you reach the end of the maximum benefits period. From surgeries to cancer or other illnesses, financial protection with short term disability insurance can help.

• For example, if you broke your wrist in an accident and your job required you to type or write all day, you wouldn’t be able to work while you healed. Short term disability insurance would kick in after a short waiting period and replace a portion of your income so you can focus on getting better without worrying about your bills.

What is long term disability insurance?

Losing your income is a frightening thought. The time you need to be out of the office may exceed the length of your short term disability policy. Long term disability insurance pays a portion of your wages while you work to get well. It allows you to maintain your standard of living in the event that a medical condition prevents you from working. Your benefits continue until you are no longer disabled or until you reach the end of the maximum payout.

• For example, if you were diagnosed with a serious illness like cancer and needed months of treatment, you could be out of work far longer than any short term policy would cover. That is where long term disability steps in, picking up where short term left off and continuing to replace a portion of your income for years, if needed.

Do I need both?

Many people have both types of coverage, and for good reason. Short term disability insurance covers you right away, while long term disability insurance picks up if your condition lasts longer than expected. Together, they help make sure there is never a gap in your income protection.

The bottom line

Short term disability and long term disability insurance both serve important roles in protecting your income. They both replace income when you are unable to work by paying cash benefits directly to you. Short term covers you when you need help fast. Long term covers you when things get serious. Having the right combination of both can give you peace of mind, no matter what life throws your way.