What distinguishes short-term disability insurance from long-term disability insurance?

Short-term disability insurance is designed to provide income replacement for a limited duration when an individual is unable to work due to a disability. Typically, this coverage lasts up to 6 months, although some policies may extend the benefit period to a year. The focus of short-term disability insurance is to support individuals during the initial recovery phase from injuries or illnesses, providing benefits that help cover living expenses while they are out of work.

In contrast, long-term disability insurance starts where short-term coverage ends, offering income replacement for a more extended period, extending well beyond the initial 6 to 12 months and possibly lasting several years or until retirement age, depending on the specific policy terms. This distinction between the duration of the coverage is critical; short-term disability addresses immediate needs, while long-term disability plans cater to more severe or ongoing health issues that can prevent someone from returning to work for a longer time.

Understanding these key differences is essential for individuals as they assess their insurance needs, particularly when planning for potential financial risks associated with disabilities.