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Difference between Short Term and Long Term Disability Insurance

Disability Insurance can be defined as an insurance policy that covers employees’ lost income while that person is impaired to work because of injury or accident. Some plans cover workers for a brief period, while others offer stable premium benefits for several decades.                

 Deciding whether to get a short term or long term policy depends on individual workers to make choices based on his primary budget, expectations, needs, and budget. As an employer, you need to know that your workers have contributed to the immense growth of your business. You can a disability plan in case of an emergency.

 You can either give them short term or long term disability insurance plans and by doing this, they can benefit from this. Your workers don’t have to bother staying away from work when there is an emergency or eventualities. When all these insurance policies are being put in place, there will be no cause for alarm or fear. They will be able to work with all their might for the benefits of your company

Short-term vs. long-term disability coverage

Still considering providing short term or long term policy for your workers can also help your company as an employer. With this disability plan, you and your workers can make premium payments. If your employees must use it, their coverage will also pay to them a percentage of their constant wages even when they are away from work. In most of the cases, several taxes are being withheld from all the employees’ disability payments. 

 In the year 2014, nearly 40% of private firm employees took part in a short term disability insurance policy and nearly 35% took part in long term disability insurance policy, based on the Bureau of Labour Statistics. The truth is there is price variability. 

 An estimate from the BLS made an estimation calculation that an employer can decide to sponsor a disability insurance policy that will cost $624 per annum for a full-time employee. Employees can pay the total cost of insurance, or you can opt to pay part of the benefits and have them pay part.

The importance of short-term and long-term disability insurance

It is essential that workers have a policy in place. One in four employees is likely to become impaired before they clock 67, from Social Security Administration. Therefore, providing short and long term disability insurance at your company is of great benefit. Dealing with injury or accident for a longer time is so hectic on its own before thinking about the loss of wages.

Differences between Short term and Long Term Disability Insurance


1. Short-term disability Insurance

This insurance policy pays employees a part of their income for a short time frame, following running out of sick leave. This is usually less than a year, and it depends on your plan. 

 This plan pays you following an elimination period based on your contracts. On the calendar, it takes 1-7 days from the date of your accident, injury, or illness. It should be noted it won’t cover anything related to work injuries.

 Life occurrences covered by Short term disability insurance

The following is a list of occurrences that can be covered by this plan –

  • Prolonged illness.
  • Child delivery.
  • Disabling injury.

 2. Long-term disability insurance:

This insurance plan starts immediately your short term disability insurance policy and employer granted sick leave have expired. This usually lasts above six months. There is a 90 or 180-day waiting period. 

This can be covered by short term disability insurance if you have a plan in place. Premium benefits vary, but it always offers coverage until the worker resumes work, is no longer impaired, or get to a Social Security retirement age.

Life occurrences covered by Long term disability insurance:

This Plan covers the following occurrences…

  • Cancer.
  • Mental disorder.
  • Injuries sustained from an accident.
  • Tissue problems such as osteoarthritis, and back pain, etc.

Advantages and Disadvantages of Short Term Disability Insurance


Short term disability insurance covers cover employees who are physically impaired to work for a short period of time Though there are some short term plans that can keep on lasting till 2 years, primarily, the plan can last up to a period of three and six months. This plan can be purchased, and then yield benefits immediately or within the first period of two weeks upon the policyholder becoming impaired.


This plan has pitfalls because benefits can be altered after some months, and this can leave the impaired employee on his her own for a longer time. This offers fewer options for payouts based on the demise of the policyholder or when the policyholder becomes physically impaired close to retirement age.

Advantages and Disadvantages of Long Term Disability Insurance


Long term disability insurance offers monthly payments in the occurrence of a disability which can last up to six months or more, and some offer benefits for the policyholder to get to 75 years old or older. 

 The main advantage of this insurance policy is it gives peace of mind when the employee is aware that premium benefits of up to 70% of the policy holder’s wages will keep on coming as long as the disability lasts. It also gives more options such as hospital stay coverage and supplemental insurance to enhance monthly payments.


This insurance plan also has some setbacks because the price is higher than the short term disability insurance. Furthermore, long term disability insurance plan usually has a period you have to wait between 3 to 6 months or more before insurance firm starts paying benefits, leaving physically impaired people to pay for their expenses at the initial months of being physically impaired.                       


It is because of all these merits and demerits, long term disability insurance is ideal for employees and employers that have their personal savings other than depending on insurance to cover up for their first few months of being physically impaired.

Author: Brandon

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