Differences between long-term and short-term disability include the length of the policy, costs and the method of obtaining the disability insurance. Short-term covers the initial couple of weeks or months the policyholder is unable to work. Long-term disability insurance is designed to protect income for an extended period of time.
Long-term disability insurance lasts significantly longer than short-term insurance. In some instances, long-term can last for years, while short-term only lasts a few months. Additionally, long-term disability insurance can be customized, which makes it more expensive. This type of insurance offers comprehensive benefits that can cover policyholders in the event of a debilitating accident or extended sickness. Long-term disability insurance also provides various rider options that allow the policyholder to tailor coverage to her distinct needs.
Another difference is that short-term policies are paid more quickly than long-term plans. Waiting periods for short-term benefits range from zero to 14 days, depending on the policy. There may be two different waiting periods to receive short-term benefits: one waiting period for accidents and a different waiting period for sickness. Long-term policies may have waiting periods of between 30 and 720 days. The most common waiting period for a long-term policy is 90 days.
Generally, short-term disability is made available thorough an employer, whereas long-term disability insurance can be purchased without an employer. In some states, short-term disability insurance must be provided by the employer. However, if the employer does not offer this insurance, the employee does not have the option to purchase the insurance. Along with long-term disability insurance being purchased without an employer, this insurance offers portability. Portability allows the policyholder to convert a group policy into a private policy in the event the employee leaves or changes jobs.
Individuals should assess their needs to determine which type of insurance is best for them should they decide to invest in this coverage. Working with a licensed insurance agent is important as well, as each state's requirements for terms of benefits and other important factors may differ.