Buy yourself some time to recover.
If you’re unable to work for a short period of time due to a disability – an injury or illness – short-term disability insurance will replace your income while you recover. The exact definition of a disability will be outlined in your insurance policy. The length of time that short-term disability insurance lasts – the benefit period – is typically between three and six months, and is often offered through employers as a benefit to employees.
Short-term disability insurance can be comparable in cost to long-term disability insurance. However, it’s oftentimes more economically feasible to get a short-term disability policy through your employer, who may offer it for free or at a low cost, rather than paying the full cost on your own for a relatively limited policy (in terms of coverage amount and length, compared to long-term disability insurance).
The cost of a short-term disability policy depends on several factors, including:
The main difference between short-term disability insurance and long-term disability insurance is the benefit period. Long-term disability insurance policies are designed to last for many years, sometimes until retirement, while short-term disability insurance protects for under a year. The total benefit for short-term disability is therefore smaller. Despite the different lengths of coverage, short-term and long-term disability insurance policies can cost the same, between 1-3% of your income.
Short-term and long-term disability insurance policies work to complement each other. Short-term disability insurance protects your immediate income needs, while long-term disability insurance is there if you need longer periods of coverage. There is usually little overlap between them, because you have to exhaust your other disability insurance options before your long-term disability insurance kicks in.
Colin Lalley is the Associate Director of SEO Content at Policygenius in New York City. His writing on insurance and personal finance has appeared on Betterment, Inc, Credit Sesame, and the Council for Disability Awareness. Colin has a degree in English from the University of North Carolina at Chapel Hill.