Disability insurance can be short-term (STD) or long term (LTD). Basically, they both replace your income, one is for a shorter period of time than the other.
Short-term Disability Insurance STD
If you are disabled for a short time – usually between three to six months you could get a portion of your income. With disability insurance, you must be unable to work for a certain amount of time before you can receive disability benefits. This time period is called the elimination period, and it is a lot shorter for short-term disability insurance – typically between 30-90 days.
Long-term Disability Insurance LTD
As the name implies, LTD benefits someone who is disabled for a long time – 3+ months. The elimination period for long-term disability insurance can be as long as a year. A common plan would replace 60% of your income. Most people prefer to buy long-term disability insurance, since it provides coverage for a longer time period. We tend to agree that LTD plans are worth the investment.