Short-term vs. long-term disability

• Income replacement: Benefits are typically a percentage of earnings, not full pay.
  Most policies replace 50%–70% of gross or net income, depending on structure.
• Time continuity: Coverage bridges the gap between “can’t work” and “can work again”—or retirement.
• Probability reality: Disabilities are far more likely than premature death during working years.
  Musculoskeletal issues, cancer, mental health conditions, and chronic illness are common drivers.

If your income stops, everything else becomes secondary. Disability insurance addresses that first failure point.

• Short-term disability (STD): Designed to cover temporary disabilities.
  Benefit periods typically range from 3 to 6 months, sometimes up to 12 months.
• Long-term disability (LTD): Designed for extended or permanent disabilities.
  Benefit periods commonly last 2 years, 5 years, to age 65 or 67.
• Elimination periods: STD usually begins after a short wait (7–30 days); LTD often starts after 90–180 days.

Short-term keeps the lights on. Long-term protects your career and future earnings.

• Sequential coverage: STD pays first; LTD begins when STD ends.
  Gaps occur when elimination periods and benefit durations don’t align.
• Employer plans: Many employers offer STD, LTD, or both—but often with limits and offsets.
• Individual policies: Often used to supplement employer coverage or replace it entirely for higher earners or self-employed individuals.

The most common failure isn’t lack of coverage—it’s a timing gap when income stops.

• Definition of disability: “Own occupation” vs. “any occupation.”
  Own-occupation definitions are generally stronger, especially for professionals.
• Benefit offsets: Employer LTD often reduces benefits by Social Security Disability or workers’ compensation.
  This can materially reduce the net benefit received.
• Benefit caps: Group policies frequently cap monthly benefits.
  High earners often discover they’re underinsured only after a claim.
• Mental/nervous limitations: Many policies limit benefits for mental health claims to 24 months.
• Residual/partial disability: Determines whether partial income loss is covered when you return to work part-time.

Disability insurance is less about “if” and more about “how the policy defines it.”

• Early-career workers: Often rely on employer STD/LTD but may need supplemental coverage as income grows.
• Professionals and specialists: Own-occupation LTD is critical where skills are narrow and earnings are high.
• Self-employed: Individual LTD is often the primary safety net.
  Business overhead expense (BOE) coverage may also be relevant.
• Near retirement: Shorter benefit periods may be appropriate, but elimination periods still matter.

The more specialized your income, the more precise your disability coverage needs to be.

• Assuming employer coverage is enough: Group plans are a starting point—not a guarantee.
• Ignoring tax treatment: Employer-paid premiums usually result in taxable benefits.
  Individually paid premiums often produce tax-free benefits.
• Choosing the cheapest option: Lower premiums often mean weaker definitions and tighter limitations.

Disability insurance fails quietly—until it’s needed loudly.

Do I need both short-term and long-term disability?
Often yes. Short-term covers immediate income loss; long-term protects against extended disability.

Is disability insurance expensive?
Relative to income protected, it’s usually inexpensive—especially when purchased young and healthy.

What if I can work in a different job?
That depends on the policy’s definition of disability. This is why own-occupation language matters.