What is short-term disability insurance?

Short-term disability insurance is financial protection against the loss of your income, but benefits don't last very long.

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Disability insurance protects you from the financial burden of losing your income if you become so disabled or ill that you can’t work. It is meant to replace your income with monthly benefits payments that cover about 60%-80% of your pre-tax salary, meaning that benefits almost entirely match your take-home pay.

The time during which you receive benefits is called a benefit period. Long-term disability insurance and short-term disability insurance are categorized by the length of their benefit period. Long-term disability insurance lasts for years, and possibly until you retire. Short-term disability insurance only lasts a few months.

One of the major differences between short-term disability insurance and long-term disability insurance is that you almost always get the former from your employer. It’s possible to purchase short-term disability insurance on your own, but it may be difficult and prohibitively expensive to do so.

How short-term disability insurance works

Short-term disability insurance typically only pays out benefits for under a year, while long-term disability insurance may pay benefits much longer. Both policies cease paying benefits when you recover from your disability and can return to work.

The short-term disability benefit period typically lasts just 26 weeks, although some coverage may last an entire year. During that time, you’ll receive approximately 80% of your pre-tax salary (roughly equivalent to your after-tax salary) as long as you remain out of commission. That compares favorably with long-term disability insurance, which typically pays about 60% of your pre-tax salary.

Short-term disability insurance is usually offered as part of your employer’s benefits package, and you usually don't want to get short-term disability insurance independently because it is very expensive. However, short-term disability insurance offered by your employer may actually be considerably cheaper, even free.

If you do become disabled, short-term disability benefits kick in a lot sooner than long-term disability insurance because it has a shorter elimination period, which is the time between the time you become disabled and the day you start receiving benefits. With short-term disability insurance, the waiting period is usually no more than 14 days, but with long-term disability insurance the average waiting period is about three months.

If you don’t think your savings can last you the entire elimination period, you may consider short-term disability insurance a better bet than long-term disability insurance — and you can usually get it for free from an employer. A lot of expenses may need to be covered during the waiting period, and short-term disability insurance can get you over the hump.

Eligible disabilities

To claim disability insurance benefits, you need to prove that you were injured. But long-term disability insurance covers a wider range of disabilities than short-term disability insurance in that the latter doesn’t include any injury that can be covered by workers’ compensation. Both types of disability insurance should cover chronic problems like back pain and heart disease as well as injuries incurred off the job.

Short-term disability insurance rates

Because short-term disability insurance is rarely sold in the individual market, no such rule-of-thumb exists, but you’ll probably have to pay the same amount as long-term disability insurance. These rates may be considerably cheaper if you get it from a group disability insurance plan, such as your employer. In fact, it's probably free!

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Takeaway

Short-term disability insurance may not meet all your coverage needs. Check out long-term disability insurance to make sure you're protected.

Getting short-term disability insurance

Many people receive short-term disability insurance through their employer. This is often included as part of a benefits package.

You can also get free quotes for short-term disability rates from Policygenius’ partner LifePreserve, although short-term disability coverage you purchase independently may have relatively tiny amounts of coverage and may not be covered in your state. If you don’t get disability insurance through your employer, you’re going to want long-term disability coverage, which you can get directly from us.

Some states require employers to provide short-term disability insurance. Those states are California, Hawaii, New Jersey, New York, and Rhode Island, as well as Puerto Rico.

To claim short-term disability benefits, you need to file a claim with the insurance company or through your employer.

Is short-term disability insurance worth it?

Short-term disability insurance allows you to buy yourself some time to recover from an illness or injury. But it may be too expensive for the average person to afford, and the benefit period may be too short to completely cover the disability.

If you receive group disability insurance, you may want to use it as a complement to long-term disability insurance. Employer-sponsored short-term disability insurance won’t pay out benefits if you sustain the injury while at work (for which you have to claim workers’ compensation), but long-term disability insurance does cover such disabilities.

Short-term disability insurance may be worth it if you’re concerned about the elimination period. It can provide you with benefits while you wait for the long-term disability insurance benefits to kick in.