Short-Term vs Long-Term Disability: Which Do You Need?

Benefit Period

A benefit period is the maximum timeframe that benefits are payable due to a qualifying disability.

For short-term disability insurance, benefit periods range from a few weeks to a few months. Long-term disability insurance benefit periods range from five years to retirement age.

You choose which to buy. The longer the benefit period, the higher the cost of coverage.

Elimination Period

An elimination period is a waiting period before benefits begin. It’s the number of days you must be disabled, according to the policy, before you’re eligible for benefits.

Long-term disability insurance often requires longer elimination periods than short-term. Short-term disability elimination periods are typically 7-14 days, while long-term disability insurance plans usually offer elimination periods of 30, 60, 90, 180, or 365 days.

You choose which elimination period option to buy. The shorter the elimination period, the higher the coverage cost.

Coverage Level

The coverage levels, also known as the benefit amounts, are the income you receive while eligible for benefits.

Your coverage level options are based on your salary. Short-term disability insurance usually insures a more significant percentage of your income but for a shorter time. Long-term disability insurance usually covers less of your income for a longer period.

Sample coverage level options:

Short-term:

$50 to $600 weekly: for Self-Employed or Commissioned Salesperson
$50 to $1,000 weekly: for W-2 Employees

Long-term:

$500 through $20,000 monthly

Both types of insurance require you to meet the status of total disability before the elimination period begins. An illness or injury is considered a total disability if it prevents you from performing your job’s primary duties.

How Disability Insurance Works:

Step 1: You suffer an illness or injury. Your condition doesn’t allow you to perform your duties at work, and you’re considered disabled according to your insurance policy provisions.

Step 2: You submit your claim to the disability insurance company.

Step 3: After the elimination period, you start receiving benefits. You’ll receive them until your benefits period is over, or you’re not considered disabled, whichever comes first.