Short Term vs Long Term Disability Insurance – Check Benefits, Types & Difference


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In today’s world, it is difficult to survive without earning and to earn, one needs to stay fit and fine without any disability. Thus comes, the need for Disability Insurancewhich helps to provide a financial shield to the policyholder, who meets any disability challenges and is unable to continue professional duties. Be it a permanent disability or a temporary one, with disability insurance, a bread earner of a family can ensure that the family’s financial stability is not compromised during the period of disability.  

This post aims to help you understand all about disability insurance and the difference between short-term and long-term disability insurance plans. So, stay tuned and read this entire article.

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What is Disability Insurance?

Disability insurance meaning in simple words, is a financial protection against any risk of disability that can hamper a person’s professional working ability. Through disability insurancea person can get coverage for the monthly lost wages and even meet the medical expenses needed to treat the disability. In short, it aims to make life normal at least, financially for the one who suffers a temporary or permanent disability.

Why Opt for Insurance with Disability Rider Benefit?

Here are the main benefits of opting for a term insurance plan with a disability rider benefit:

  • More flexibility to customize insurance coverage to meet your specific requirements. You can choose the length as well as the waiting period for these plans
  • Guaranteed financial protection in case you meet an accident, and are unable to work. This kind of insurance rider benefits can help you maintain your financial stability and cover your medical expenses as well as lost wages
  • Offers complete peace of mind that if anything goes wrong at work, you will not face a financial crisis due to your disability
  • One of the most remarkable features of disability insurance is that it comes with a guaranteed renewal clause. It means that the policyholder can renew the policy and enjoy the same benefits, and the insurer cannot cancel it.

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Two Types of Disability Insurance

Disability insurance is broadly divided into two types, and they are:

1. Short-Term Disability Insurance

As suggested by its name, short-term disability insurance offers coverage for a shorter period, in case of a temporary disability. Thus, the benefits of this kind of disability insurance policy offer benefits for a maximum of 2 years. The main types of injuries covered under short-term disability are injuries due to an accident or any long-term illness.

2. Long-Term Disability Insurance

On the other hand, long-term disability insurance is meant for those with a permanent or long-term disability. The sole aim of this type of disability insurance is to provide the policyholder with all the benefits of the policy for several years. This policy offers coverage against heart diseases, mental illness, tissue damage, and even cancer.

Difference Between Short-Term and Long-Term Disability Insurance

The table below shows you the clear short-term vs long-term disability insurance plan features:


Short-Term Disability Insurance

Long-Term Disability Insurance 

Most Suitable Candidate

Anyone with a temporary disability

Anyone with a lifetime or prolonged disability


From several weeks up to 2 years maximum

Several years in a row

Waiting Period

0-14 Days

Might take several weeks


Low premium rates for lower returns

High premium rates for higher returns

Which is Better for You: Short-Term or Long-Term Disability Insurance?

So, one should buy long-term disability insuranceor short-term disability insurance; which is better out of the two? Well, this is a tricky question! You must consider certain factors, as mentioned earlier in this post to decide which type of disability insurance will be perfect for you. In general terms, those who want a disability insurance plan with cheaper premiums even if they offer lower returns must go for a short-term disability insurance plan.

Whereas, those who want extra protection because they feel they are working at a higher-risk workplace, where there are higher chances of meeting a lifetime disability, must choose a long-term disability insurance plan. Both types of disability insurance plans will prepare you for a backup plan to meet any type of financial constraints owing to a disability in the future.

How to Buy a Disability Insurance?

In the case of a self-employed person, there is no scope for the employer to offer disability insurance. However, individuals working under some employers can check with the employer about the type of disability insurance they are willing to offer them. Alternatively, you may also buy a disability insurance rider with your individual term life insurance plan by paying an extra premium.

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Whether you choose to get a short-term disability insurance policy or a long-term, both will play a crucial role in protecting your financial stability during periods of disability. The choice is yours, whether you wish to get this protection for the long-term with higher returns and higher risks, or you want to opt for a short-term with lower returns and lower risk factors.

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FAQs: Short Term VS Long Term Disability Insurance

What can be the maximum duration of short-term disability?

A majority of short-term disability insurance offers the benefits if they are for a maximum 2-year period. These plans, as the name suggests are meant only for a short period, and you can enjoy all the policy benefits only with a maximum duration of 2 years.

Who needs disability insurance the most?

Anyone working in a job that has a higher risk of injury must consider opting for disability insurance. It will help to protect you with financial security in case of an unfortunate accident leading to disability.

Is 2 years short-term or long-term?

Any insurance plan with a duration of 3 years or less than 3 years is considered to be a short-term insurance plan. So, a 2-year insurance plan is a short-term plan with lower returns.

Is short-term better than long-term?

If compared, experts feel that short-term insurance plans are better than long-term plans because even though they yield lower returns, they are less risky. Moreover, you can access the money invested sooner for any urgent requirement.

Which is riskier short or long-term?

Since short-term insurance plans offer lower returns, as compared to long-term plans, they are considered to be less risky.

Is disability covered under health insurance?

Yes, policyholders with accidental disabilities will get coverage by a majority of health insurance plans without any extra clauses.

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Jun 30, 2023
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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