Exhibit 10.2

STANCORP FINANCIAL GROUP, INC.

SHORT TERM INCENTIVE PLAN

1. PURPOSES. This Plan is intended to enable the Company to attract, retain,
motivate and reward qualified executive officers and key employees by providing
them with the opportunity to earn competitive annual cash bonus compensation
directly linked to individual performance, business unit performance and overall
Company performance. This Plan is also intended to qualify eligible portions of
the compensation paid under the Plan as “performance-based compensation” within
the meaning of Section 162(m), so as to exempt such eligible compensation from
the deduction limits imposed by Section 162(m) and to make such eligible
compensation deductible by the Company for Federal income tax purposes.

2. DEFINITIONS. The following words as used in this Plan have the meanings
ascribed to each below:

(a) “162(m) Performance Goals” means one or more targeted levels of performance
for a fiscal year with respect to one or more of the following objective
measures with respect to the Company or any Business Unit: net income, earnings
per share, net income or earnings per share excluding after-tax net capital
gains, stock price increase, total shareholder return (stock price increase plus
dividends), capital adequacy ratio, double leverage ratio, assets under
management, portfolio return, return on equity, return on assets, return on net
assets, return on capital, return on investment, economic value added, revenues,
premium revenues, annualized new premiums, operating expenses, income before
income taxes, earnings before interest, taxes, depreciation and amortization
(EBITDA), non-premium earnings, net investment income and cash flows, or any of
the foregoing before the effect of acquisitions, divestitures, accounting
changes, and restructuring and special charges (determined according to criteria
pre-established by the Committee). The portion of any cash bonus paid under the
Plan based on achievement of 162(m) Performance Goals is intended to constitute
“performance-based compensation” within the meaning of Section 162(m).

(b) “Award” means an annual cash incentive award granted in accordance with
Section 4 of the Plan.

(c) “Board” means the Board of Directors of the Company

(d) “Business Unit” means any subsidiary, division, line of business or other
unit of the Company.

(e) “Committee” means the Organization and Compensation Committee of the Board,
which shall be comprised solely of two or more “outside directors” as defined in
regulations promulgated under Section 162(m).

(f) “Company” means StanCorp Financial Group, Inc.

(g) “Discretionary Bonus” means the portion of a Participant’s target bonus for
any fiscal year (not to exceed 20% of the target bonus) that will be payable (up
to the maximum bonus percentage thereof) in the discretion of the Committee and
will not be subject to achievement of 162(m) Performance Goals or Other
Performance Goals. The Discretionary Bonus will not constitute
“performance-based compensation” within the meaning of Section 162(m).

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(h) “Other Performance Goals” means one or more targeted levels of performance
for a fiscal year addressing aspects of a Participant’s individual job
performance or the performance of any Business Unit for which the Participant is
responsible or to which the Participant contributes, as determined and
established by the Committee in its discretion. Other Performance Goals may be
either objectively or subjectively determinable. The portion of any cash bonus
paid under the Plan based on achievement of Other Performance Goals will not
constitute “performance-based compensation” within the meaning of
Section 162(m).

(i) “Participant” means (i) each executive officer of the Company and (ii) each
other key employee of the Company or a subsidiary, whom the Committee designates
as a participant under the Plan.

(j) “Plan” means the Stancorp Financial Group, Inc. Short Term Incentive Plan,
as set forth herein and as may be amended from time to time.

(k) “Section 162(m)” means Section 162(m) of the Internal Revenue Code of 1986,
as amended, and any regulations promulgated thereunder.

3. ADMINISTRATION. The Committee will administer and interpret the Plan. In
accordance with Section 4 of the Plan, the Committee will establish target
bonuses and performance goals for the applicable year. In accordance with
Section 5 of the Plan, the Committee will certify whether such performance goals
have been met, and determine the amount of bonuses to be paid. The Committee’s
determinations under the Plan will be final and conclusive.

4. TARGET BONUSES AND PERFORMANCE GOALS. To make an Award to any Participant for
any fiscal year under the Plan, the Committee shall, no later than the 90th day
of that fiscal year, establish in writing (i) a target cash bonus amount for the
Participant for performance in that fiscal year, (ii) the percentage (e.g.,
150%) of the target bonus that shall be the maximum bonus, (iii) the portion(s)
of the target bonus that will be payable based on 162(m) Performance Goals
and/or Other Performance Goals for the fiscal year, and the portion of the
target bonus that shall be a Discretionary Bonus, (iv) the 162(m) Performance
Goals and/or the Other Performance Goals for the fiscal year, and (v) the
methodology for determining the bonus amounts to be paid based on the level of
achievement of the 162(m) Performance Goals and/or the Other Performance Goals
for the fiscal year. The Committee may, in its sole discretion, reserve the
right to reduce the resulting cash bonus under any Award prior to payment on
such terms as determined by the Committee. The terms of Awards shall be promptly
communicated to Participants.

5. COMPUTATION AND CERTIFICATION OF BONUS. Following the conclusion of any
fiscal year, prior to the payment of any cash bonuses under the Plan with
respect to that year, the Committee shall certify in writing the levels of
attainment of the 162(m) Performance Goals and the Other Performance Goals for
the year, the amount of Discretionary Bonus determined by the Committee for each
Participant, and the calculation of the total bonus amount for each Participant.
No payment of bonus with respect to any portion of the target bonus

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based on 162(m) Performance Goals or Other Performance Goals shall be paid if
the related performance goal is not met. The Committee shall not exercise its
discretion to pay any amount as a Discretionary Bonus in replacement for amounts
not earned under the 162(m) Performance Goals. Bonuses shall be paid as soon as
practicable following certification by the Committee, and no later than March 15
of the year following the year covered by the Award.

6. MAXIMUM BONUS. The maximum cash bonus that may be paid or accrued for any
Participant with respect to performance of the Company in any fiscal year shall
be $2,500,000.

7. GENERAL PROVISIONS.

(a) Effective Date. This Plan has been adopted by the Board and is effective
beginning with Awards made to Participants for performance in the Company’s 2007
fiscal year, which shall be granted in the first 90 days of 2007. The Plan is
subject to approval of the Company’s shareholders and was approved by
shareholders at the 2007 Annual Meeting of Shareholders.

(b) Termination; Amendment. The Board may at any time amend or terminate the
Plan, except that no amendment will be effective without approval by the
Company’s shareholders if such approval is necessary to qualify amounts payable
hereunder as “performance-based compensation” under Section 162(m). Unless it is
re-approved by the shareholders, the Plan shall terminate on the date of the
first shareholder meeting that occurs in the fifth year after the year in which
the Plan was last approved or re-approved by shareholders. No termination of the
Plan shall affect performance goals and related Awards established by the
Committee prior to such termination.

(c) No Employment Rights. Nothing in this Plan will be construed as conferring
upon any Participant any right to continue in the employment of the Company or
any of its subsidiaries.

(d) Nonalienation of Benefits. Except as expressly provided herein or otherwise
required by applicable law, no Participant or beneficiary will have the power or
right to alienate, transfer, anticipate, sell, assign, pledge, attach, or
otherwise encumber the Participant’s interest under the Plan.

(e) Withholding. Any Award payable to a Participant or a beneficiary under this
Plan will be subject to any applicable Federal, state and local income and
employment taxes and any other amounts that the Company or a subsidiary is
required at law to deduct and withhold from such Award.

(f) Plan Unfunded. The entire cost of the Plan shall be paid from the general
assets of the Company. The rights of any Participant or beneficiary to receive
an Award under the Plan shall be only those of a general unsecured creditor, and
neither the Company nor the Board or the Committee shall be responsible for the
adequacy of the general assets of the Company to meet and discharge Plan
liabilities.

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(g) Severability. If any provision of this Plan is held unenforceable, the
remainder of the Plan will continue in full force and effect without regard to
such unenforceable provision and will be applied as though the unenforceable
provision were not contained in the Plan.

(h) Governing Law. The Plan will be construed in accordance with and governed by
the laws of the State of Oregon, without reference to the principles of conflict
of laws.

(i) Headings. Headings are inserted in this Plan for convenience of reference
only and are to be ignored in any construction of the provisions of the Plan.