Short-Term and Long-Term Disability Insurance

Other Disability Insurance Policy Options

In addition to different waiting periods, benefits periods, and benefits rates, which are described here, Short-Term Disability Insurance (STD) and Long-Term Disability Insurance (LTD) policies can vary in other aspects. These details are important because they can have a major impact on your benefits if you become disabled.

Definition of Disability

Disability insurance providers think about disability in two ways:

  1. Own-Occupation Disability (or “Own Occ” ) means your disability prevents you from performing your own occupation, that is the work or job you have been trained to do and have experience in
  2. Any-Occupation Disability (or “Any Occ”) means your disability prevents you from performing any occupation

Own-occupation insurance policies pay you if you are unable to perform your own occupation, even if you are able to get a different type of job. They have higher premiums than policies that require you to be unable to perform any occupation.

Trial Work Period

Policies may allow you to return to work on a trial basis. For example, your policy may give you a two-week trial period. If you go back to work for less than two weeks and then find that you can’t do your job because of your disability, the policy would allow you to continue your benefits as if you hadn’t returned to work. If you are able to return to work and then you find that the same disability again prevents you from doing your job, your policy may or may not require another waiting period.

Part-Time Work

Some plans allow you to return to work part-time while continuing to pay your benefits. This is usually referred to as a “residual” or “loss of earnings” benefit. When an employee returns to work part-time, wages for hours worked are paid by the employer and STD or LTD replaces the regular hours not worked at the pay replacement level.

For example, if you worked 8 hours per day before your disability, and you are able to return to work 4 hours a day, the disability insurance policy may replace some of your income for the remaining 4 hours.

Changes to Your Premium

Under “non-cancelable policies,”" your premium can never be raised above those shown in the policy. Also, the policy cannot be canceled as long as the required premiums are paid on time.

Under guaranteed renewable policies,” your premium can be raised, but only if the change affects an entire class of policyholders. Initial premiums for guaranteed renewable policies can be less expensive than non-cancelable policies.

Other less expensive policies that are "guaranteed renewable policies" or have limited premiums are also sometimes available.

Cost of Living Adjustment (COLA)

Some LTD policies allow you to buy a cost-of-living-adjustment (COLA) to add to your basic disability income coverage. This additional benefit raises the income you get from your insurer by a certain percent each year. For example, if you become disabled and are unable to work, the COLA will gradually raise your benefits to match the higher prices of rent, food, utilities, medical, and other expenses.

Other policies don’t include COLA, but do allow you to buy additional coverage over time as your household expenses go up, without having to undergo any additional medical underwriting.


Many policies will not cover disabilities caused by suicide attempts, drug abuse, war, or attempts to commit a crime. Pre-existing conditions are also frequently excluded, as was discussed earlier in this article. On-the-job injuries, which are covered by workers’ compensation insurance, are also not covered.

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