What Is Short-Term Disability Insurance? | Benefits & Coverage

• Dec 16, 2025
• Admin

Short term disability insurance (STDI) is a critical form of income protection that ensures financial stability when an individual is temporarily unable to work due to illness or injury. Whether it’s due to a surgical recovery, pregnancy, or a serious health condition, short term disability insurance provides a financial safety net during such challenging times. In this guide, we will explore how STDI works, who needs it, its benefits, and how it differs from long term disability insurance.

What Is Short Term Disability Insurance?

Short term disability insurance is a type of insurance policy that replaces a portion of your income if you are temporarily unable to work due to a medical condition. These conditions are typically non-work related, meaning they are not covered by workers' compensation.

STDI policies are often offered by employers as part of employee benefits or can be purchased individually from private insurance providers.

How Does Short Term Disability Insurance Work?

When you become disabled and cannot perform your job, you must file a claim with your insurance provider. After a waiting period known as the elimination period (usually 7 to 14 days), the insurer begins paying a percentage of your income—commonly 50% to 70% of your weekly earnings.

Coverage usually lasts for a period of 3 to 6 months, depending on the policy.

Example:

If your weekly income is $1,000 and your STDI policy covers 60%, you would receive $600 per week while you are on approved disability leave.

Coverage Inclusions and Exclusions

Common Inclusions:

• Recovery from surgery
• Injuries from accidents
• Serious illnesses
• Pregnancy and childbirth recovery
• Mental health conditions (in some cases)

Common Exclusions:

• Pre-existing conditions (within a look-back period)
• Disabilities arising from criminal acts
• Self-inflicted injuries
• Work-related injuries (usually covered by workers' compensation)

Eligibility Requirements

Eligibility varies depending on the provider and the policy. Typically, to qualify for short term disability benefits:

• You must be actively employed
• You must meet minimum work-hour requirements (e.g., 30+ hours per week)
• You may need to have completed a probationary period

Some employers automatically enroll workers, while others require you to opt in.

Types of Short Term Disability Insurance

1. Employer-Sponsored Plans

These are group policies offered as part of employee benefits. Premiums are usually lower, and in some cases, the employer may cover the full cost.

2. Voluntary Plans

Employees can purchase additional coverage through their employer at a group rate.

3. Individual Plans

These are purchased directly from insurance companies. They offer customizable options but are usually more expensive.

4. State-Mandated Plans

Some states like California, New York, and New Jersey have mandatory disability insurance programs that provide short term benefits.

Benefits of Short Term Disability Insurance

1. Income Protection

Replaces a portion of lost wages, helping you cover essential expenses like rent, mortgage, utilities, and groceries.

2. Peace of Mind

Provides financial relief so you can focus on recovery rather than stressing about bills.

3. Job Security

In many cases, employers are legally required to hold your job or provide a similar role once you return from disability leave.

4. Complements Other Benefits

Can be combined with paid sick leave or long term disability insurance for extended coverage.

Short term disability acts as a bridge to long term disability, helping cover the income gap until long term benefits kick in.

Costs and Premiums

Factors That Affect Cost:

• Age
• Occupation
• Health history
• Coverage amount and duration
• Waiting period length

Premiums for employer-sponsored plans may range from $10 to $50 per month, while individual plans can be higher depending on risk factors.

Claims Process

1. Report the Disability

Notify your employer and insurance provider as soon as possible.

2. Provide Documentation

Submit medical records, a physician’s statement, and possibly employer verification.

3. Undergo Evaluation

The insurer reviews your claim and may request additional documentation or a medical exam.

4. Receive Benefits

If approved, payments begin after the elimination period and continue for the policy term.

Common Myths and Misconceptions

Myth 1: "It won’t happen to me."

Even healthy individuals can face unexpected injuries or illnesses.

Myth 2: "Workers’ comp will cover me."

Workers’ compensation only covers work-related injuries.

Myth 3: "It’s too expensive."

Employer-sponsored plans are often affordable or free.

Myth 4: "I have enough savings."

Savings can be depleted quickly; STDI offers a consistent safety net.

Choosing the Right Policy

Key Considerations:

• Coverage amount (percentage of salary)
• Benefit duration
• Waiting period
• Policy exclusions
• Provider reputation and reviews

Consult a licensed insurance advisor to tailor the plan to your needs.

FAQs about Short Term Disability Insurance

Q1: How long does short term disability insurance last?

Typically between 3 to 6 months, depending on the policy.

Q2: Can I get short term disability if I'm self-employed?

Yes, through individual policies from private insurers.

Q3: Is pregnancy covered?

Yes, most plans cover maternity leave, including recovery from childbirth.

Q4: Do I need a medical exam to apply?

Not always. Group plans often don’t require it, but individual plans might.

Q5: What happens if my claim is denied?

You can appeal the decision by submitting additional documentation or seeking legal help.

Q6: Can I have both short term and long term disability coverage?

Yes, and it's often recommended to ensure full protection.

Q7: Is it taxable?

If your employer pays the premiums, benefits may be taxable. If you pay with post-tax income, they are usually tax-free.

Q8: Does it cover mental health?

Some policies include mental health conditions like depression or anxiety. Always check policy details.

Conclusion

Short term disability insurance is a vital safety net that provides income during periods when you’re medically unable to work. Whether you opt for an employer-sponsored plan or purchase individual coverage, understanding the terms, benefits, and claims process can help you make an informed decision. In uncertain times, STDI offers more than just money—it offers peace of mind and a path to recovery without financial strain.

If you're currently employed, check with your HR department about your coverage options. If you're self-employed or your job doesn’t offer it, explore individual plans from reputable insurers. Taking this proactive step can safeguard your future and help you weather life's unexpected challenges with confidence.