Term of Disability

How short is short-term? Short-term disability insurance is designed to provide income to employees who become disabled due to sickness or an accident, and are unable to work after an initial waiting period (generally, one to seven days). Short-term benefits are usually expressed in terms of the maximum number of weeks that the plan will pay (the industry standard is 26 weeks).

Government statistics show that these benefits typically replace about 50 percent to 67 percent of an employee's income. Benefits payment is usually expressed in terms of a maximum number of weeks (13, 26, or 52) of benefits for a single period of disability. While statistics show that most short-term disabilities last far less than 13 weeks, 26 weeks is the most common limitation on disability policies.

How long is long-term? Long-term disability policies take up where short-term coverage leaves off for those who become disabled and unable to work for longer periods of time (generally six months or longer).

Long-term disability insurance typically provides 50 percent to 60 percent of pay to disabled employees, which continues to retirement age or for a specified number of months, depending on the employee's age at the time of disability. In most plans, benefits are paid for the duration of the disability up to the age of 65. Benefits are usually computed as a percentage of the employee's basic compensation prior to the disability. There is usually a maximum dollar amount per week or month.