Short-Term vs. Long-Term Disability Insurance: What You Need to Know

When most people think about protecting their income, they think about retirement savings, health insurance, or life insurance. But what happens if you’re unable to work for weeks, months, or even years due to illness or injury? That’s where disability insurance comes in — and understanding the difference between short-term and long-term disability insurance is crucial when choosing the right protection for your income.

Whether you’re just starting out, reevaluating your benefits, or planning for the future, this guide will help you understand your options — and why talking to more than one provider can make all the difference.

What Is Disability Insurance?

Disability insurance replaces a portion of your income if a health condition prevents you from working. The amount it pays and how long it pays depends on the policy you choose.

There are two main types:

• Short-Term Disability Insurance (STD): Typically covers you for a few weeks to several months.
• Long-Term Disability Insurance (LTD): Covers extended periods, sometimes years — even up to retirement age — depending on your policy.
  

What Is Short-Term Disability Insurance?

Short-term disability insurance is designed for temporary situations, such as:

• Recovering from surgery
• Severe illness (like pneumonia)
• Pregnancy and childbirth recovery
• Minor but work-limiting injuries (like a broken arm)
  

Most policies replace 40% to 70% of your income, and benefits usually begin within 1–2 weeks of your disabling event. Coverage typically lasts from 3 to 6 months, though some policies can go up to a year. Check the specifics of your policy to know how long coverage is offered.

Who Might Need It:

• Hourly workers or employees without much paid sick leave
• Gig workers or small business owners with variable income
• People in physically demanding jobs with higher short-term injury risks
  

General Cost Guidance:

Short-term policies are generally more affordable than long-term ones, especially for younger and healthier individuals. Premiums can be:

• Employer-paid (common in company benefit packages)
• Privately purchased, ranging from $10–$50/month depending on age, income, job, and health status

What Is Long-Term Disability Insurance?

Long-term disability insurance kicks in after a longer waiting period (often 90–180 days) and is designed for serious or prolonged illnesses or injuries, such as:

• Cancer
• Serious mental health conditions
• Stroke or heart disease
• Chronic pain or back disorders
• Permanent injury
  

Long-term policies may cover you for two years, five years, ten years, or up to age 65 or retirement — depending on what you purchase. Benefits also generally replace 40% to 60% of your income. Because that number can vary widely, and even beyond those ranges, understand the percentage of coverage offered for all policies you are considering. 

Who Might Need It:

• Primary breadwinners
• Self-employed professionals or business owners
• Anyone with significant monthly expenses or dependents
• Workers without a safety net from family or personal savings
  

General Cost Guidance:

Because of their longer coverage periods and higher payouts, long-term disability premiums are higher. Costs vary based on:

• Occupation (higher-risk jobs cost more)
• Age and health (younger and healthier = cheaper)
• Income level
• Policy terms (longer duration or higher payout = higher cost)
  

Premiums can range from 1–3% of your annual income for private plans. Because that guidance is also general, understand the policy amounts being proposed to you when researching, and we recommend researching with several companies offering coverage for your best options and deals.

Employer Coverage vs. Private Coverage

Many employers offer disability insurance as part of their benefits package, which is often the easiest and most affordable way to get started.

• Employer-sponsored plans: May include STD, LTD, or both, often at a reduced cost or fully paid by the employer.
• Private plans: Give you more control over the features (like length of benefit period, payout percentage, and definition of disability).

Tip: Even if your employer offers disability insurance, it’s worth reviewing the fine print. Some employer plans offer minimal coverage or have strict definitions of disability. A supplemental private policy can fill the gaps.

Comparing the Two: Side-by-Side Snapshot

Feature	Short-Term Disability	Long-Term Disability
Start Time	1–14 days after injury	90–180 days after injury
Coverage Duration	3–6 months (up to 1 year)	2 years to retirement
Benefit Amount	40%–70% of income	40%–60% of income
Typical Use	Recovery from temporary issues	Serious or chronic conditions
Cost	Lower	Higher

How to Decide What’s Right for You

There’s no one-size-fits-all approach, but here are some key considerations:

• Job Type: Physically demanding jobs may warrant both types of coverage.
• Age: The younger you are, the cheaper premiums are — and the more time you have to benefit from long-term coverage if needed.
• Income: Higher earners may want to supplement employer-provided plans with additional coverage.
• Emergency Savings: If you can cover three to six months of expenses out of pocket, long-term coverage may be more essential than short-term.
• Dependents: If others rely on your income, long-term protection can be a financial lifeline.
  

Other Costs to Keep in Mind

While this article focuses on disability insurance, remember to consider the broader financial picture when planning:

• Health insurance deductibles and copays
• Lost retirement contributions during time away from work
• Childcare, dependent care, or household help
• Long-term care needs for some disabling conditions
  

Being unable to work affects more than just your paycheck — disability coverage helps soften that blow.

Final Thought: Always Compare Providers

Just like you’d shop around for a mortgage or a car loan, you should compare multiple disability insurance providers. Coverage, exclusions, definitions of disability, and costs can vary widely between companies.

Talking to more than one agent or advisor is key. It helps you:

• Understand your options
• Avoid being sold too little or too much coverage
• Customize your plan to fit your income, profession, and risk tolerance
  

And remember: even if you already have a policy, it may be time for a review — especially if your income, job, or family situation has changed.

Bottom Line

Disability insurance isn’t just a “nice to have” — it’s a fundamental part of protecting your future earnings. Whether short-term, long-term, or both, having the right coverage in place means you can focus on recovery, not how to pay the bills. Even if you have coverage through an employer, make sure you think it is sufficient to cover possible needs. If not, peace of mind may be less expensive than you think. 

Start by learning your options, talk to multiple professionals, and get coverage that matches your life. Your future self will thank you.