Short-term disability insurance (STD) and long-term disability insurance (LTD) both offer partial replacement for an individual’s lost income if the person who holds the policy becomes unable to work due to injury or illness. In addition to the basic difference in their benefit periods, these two types of insurance tend to differ in a few other important ways. Seeing STD vs. LTD key differences explained point-by-point can often be helpful to understanding different disability insurance types. This short-term vs. long-term disability insurance comparison, in turn, can help you make wise decisions regarding your priorities if you are selecting a disability insurance policy, and may also make navigating the review process easier if the time comes when you need to file a disability claim.
Short-Term vs. Long-Term Disability Insurance Comparison: Durability of Benefits
The primary distinguishing feature on which any short-term vs. long-term disability insurance comparison hinges is obvious: duration of benefits. However, this difference in duration of benefit periods often goes hand-in-hand with a few other distinguishing features that may be useful for anyone who wants to see STD vs. LTD key differences explained.
In addition, there can sometimes be significant variation within each category concerning eligibility start dates and the types of conditions that qualify. These considerations are important to keep in mind for understanding different disability insurance types, whether you are selecting a disability insurance policy or preparing to file your disability insurance claim.
STD vs. LTD Key Differences Explained: Waiting Periods
Most disability insurance policies, both long and short, impose a waiting period between the time a policyholder’s disability begins and the time the insurance policy will provide benefits. This gap is known as the “elimination period” or “waiting period.” Even though an elimination period is a common requirement under both types of plans, it is very different in length for short-term vs. long-term disability insurance policies.
The length of the elimination period will always be set by the terms of the specific policy, and any short-term vs. long-term disability insurance comparison needs to underscore that there will be variations within each category. That said, there are general ranges into which the elimination periods required in STD vs. LTD plans typically fall.
Short-Term Disability Insurance Waiting Periods
For STD policies, the elimination period tends to be between one week at the shorter end, up to about a month for policies with longer eligibility waiting requirements. Some short-term disability insurance policies offer expedited eligibility and processing times for a limited set of qualifying conditions, such as severe injuries caused by accidents.
Long-Term Disability Insurance Waiting Periods
The elimination period of LTD benefits eligibility tends to be much longer, often three or six months and in some cases as long as a year. Another important factor in seeing STD vs. LTD key differences explained is that typically you will need to have exhausted any short-term disability benefits before a long-term disability insurance policy will begin to pay. Tying initial benefits eligibility for LTD to the end of short-term disability benefits also means that qualifying for long-term disability may mean coordinating LTD benefits with those paid under an STD plan. Short-term disability insurance does not generally extend benefits eligibility based on the length of the LTD elimination period, so the same kind of coordination does not apply.
Understanding Different Disability Insurance Types: Common Qualifying Conditions
As you may have already suspected, often there are differences in the conditions that qualify for short-term vs. long-term disability insurance, even when both policies are with the same company. On a practical level, not all conditions that might prevent someone from working for several weeks to months are likely to make work impossible for a year or longer. In addition, however, the greater financial demands an insurance company assumes in paying out benefits for a long-term disability claim provides an incentive for insurance providers to apply a more intense degree of scrutiny to LTD claims.
Keep in mind that these are broad generalizations, and always check the terms of your specific policy to be sure of what the eligibility requirements are in your own situation. You may also wish to consider consulting with a professional, such as a disability rights attorney, to see STD vs. LTD key differences explained more thoroughly in relation to your own circumstances.
Short-Term vs. Long-Term Disability Insurance Comparison: Requirements To File for Other Forms of Disability Benefits
One important point that can sometimes be overlooked in short-term vs. long-term disability insurance comparison actually relates to applications for benefits not available under either type of policy. Many LTD policies require anyone who files a long-term disability insurance claim to also submit an application for Social Security Disability Insurance (SSDI). SSDI is a federal program overseen by the Social Security Administration (SSA) and subject to strict qualifying criteria. SSDI benefits approval is contingent upon the applicant showing that their disability has lasted six months , and is expected to last at least 12 months, or that the condition causing the disability is expected to be fatal.
The one-year minimum aligns SSDI timeline expectations with LTD much more closely than with the more limited duration of STD benefits. The SSDI application process itself can also be quite lengthy, so as a general rule SSDI is not a realistic option until after an STD policy has already reached its maximum benefits duration. The same is not true with LTD policies, and in many cases a private long-term disability insurance policy will contain “offset” provisions allowing the company to reduce your monthly benefits by the same amount you are awarded as SSDI, and also to recover what the insurance company may call “overpayments” by claiming any back-payments you receive for a delayed SSDI approval.
STD vs. LTD Key Differences Explained: Income Replacement Calculations
While there is no absolute rule and individual policy terms will differ, one other factor to keep in mind in any short-term vs. long-term disability insurance comparison is that short-term disability insurance tends to cover a greater percentage of the policyholder’s lost income than is common under LTD policies. Some long-term disability insurance policies may cover up to 80% of an individual’s lost income, but a percentage closer to 60% is more common, and some policies may provide less. Even though short-term disability insurance has a shorter benefit duration, these policies often provide more robust coverage for income replacement during their covered periods.
If one of your motivations for understanding different disability insurance types is to prepare for a transition from STD to LTD coverage, it may be helpful to think of the STD benefit period as a “breathing space” that allows you to adapt your lifestyle over an initial “step-down” period during which your income is less than it would have been while working, but greater than you can expect it to be while receiving LTD benefits. Even a few months can sometimes make the difference between compounding disability with financial distress and having the opportunity to make practical adjustments for your altered income as well as your altered health.
Short-Term vs. Long-Term Disability Insurance: Comparison Factors To Consider
Occasionally there is a temptation to carry out a short-term vs. long-term disability insurance comparison as if it meant choosing between the two insurance types. The reality is that STD vs. LTD insurance policies generally serve similar needs, but over very different stretches of time. Short-term disability insurance can create a financial buffer against a loss of income that lasts from a few weeks to a few months, but provides no protection for more prolonged illness or the career-ending consequences of a permanently disabling injury. LTD coverage may last a year or longer, with some policies paying benefits until the policyholder reaches retirement age. Seeing STD vs. LTD key differences explained gives you a chance to set them side-by-side and evaluate they might complement each other. Understanding different disability insurance types also grants you the opportunity to develop some perspective on what the challenges in filing an application and navigating the review process are likely to be for each type of policy. In either case, you can set yourself up for success by developing a clear understanding of your own financial situation, preparing a “safety fund” to help cover any gaps in coverage, and documenting all medical evidence carefully in the event that you need to file a claim.
Understanding STD and LTD Differences
If you are considering your options or preparing to file a claim, taking time to review your policy terms thoroughly and understand how short-term and long-term disability insurance can work together is an important first step. Each type of coverage offers unique advantages and limitations, and aligning your insurance choices with your health needs, income goals, and long-term plans can help you feel more secure should the unexpected occur. If you need guidance in navigating your disability insurance or have questions about the claims process, consider visiting with an experienced attorney to help you protect your rights and secure the benefits you deserve.
