Understanding Short-Term Disability Insurance

If you feel relatively healthy most of the time, it’s natural to assume that you’ll stay healthy enough to work. But in reality, the odds that you’ll eventually have a serious illness or injury are pretty high. You don’t have to take just our word for it: According to the Social Security Administration, the average 20-year-old worker has a 25 percent chance of becoming temporarily or permanently disabled at some time before they retire.¹

If that happens to you, you could fall back on any sick time offered by your employer—and maybe even some unused vacation days—to keep getting paid while you’re unable to work. If you still can’t work, the Family Medical Leave Act (FMLA) will keep your job safe for up to 12 weeks, but that’s it: You won’t receive a paycheck while you finish recovering. That’s where short-term disability insurance comes into play. It can replace a percentage of your salary if illness or injury means that you can’t work.

Below, we take a closer look at what short-term disability insurance is, how it differs from long-term disability insurance and how it works. We also answer other common questions about this important coverage.

What is short-term disability insurance?

Short-term disability (STD) insurance is designed to replace some of your income if you’re temporarily unable to work due to injury or illness. It’s a vital safety net that helps cover your living expenses and additional medical care, allowing you to focus on recovery and keep your finances on track.

Many employers offer short-term disability insurance as a benefit, but it’s also possible to buy an individual policy on your own if you’re self-employed or simply want additional coverage.

STD often kicks in after a stroke, surgery or illness such as Lyme disease. And it’s often used to help replace part of a paycheck after a back injury or other musculoskeletal condition—except workplace injuries. Those injuries are instead covered by a workers’ compensation policy (known as workers’ comp).

How does short-term disability insurance work?

There are two types of disability insurance: short-term disability insurance and long-term disability insurance. STD insurance is designed to provide you with income beginning a few days or weeks after you’re no longer able to work due to injury or illness. Ideally, it lasts long enough for your long-term coverage to kick in, between three and six months.

Long-term disability insurance covers you if you become disabled due to an illness or injury that keeps you out of work for many months or even years. While long-term disability insurance can be a powerful way of protecting your ability to earn an income, there’s a catch: It doesn’t start paying right away. Often, you have to wait three to six months (or more) before you get a payout.

How much does short-term disability pay?

Short-term disability coverage typically pays between 40 percent and 70 percent of your regular earnings, depending on the plan. Many employer-sponsored STD plans fall somewhere in the ballpark of 50 to 70 percent, though you can often purchase additional coverage with an individual policy.

When does short-term disability kick in?

Ultimately, this will depend on the terms of your policy. Sometimes, you’ll need to use all of your sick days before coverage kicks in. It’s very common for policies to require a short waiting period, or “elimination period”—typically a few days to two weeks—before payments begin. In other cases, it starts immediately.

Read the information about your policy to know for sure. If your employer provides coverage, get a document from your HR department (or their contact) called the “summary plan description.”

What does short-term disability insurance cover?

STD usually covers most non-work-related injuries or illnesses that you might experience, including:

• Mental or physical illnesses: Substance abuse, depression, cancer or debilitating conditions and complications resulting from disease or events like a stroke, surgery or Lyme disease. Nearly eight of 10 claims here at Northwestern Mutual are the result of an illness.²
• Accidental injuries: Back or other musculoskeletal conditions resulting from non-work-related accidents.
• Pregnancy and maternity leave: While not all policies cover pregnancy and maternity leave, many do.

Most policies also include a list of exclusions, which in this case may include types of injuries or illnesses that are specifically not covered, which may include these examples:

• Self-inflicted injuries and other forms of self-harm
• Injuries or medical issues caused by the use of illegal substances
• Injuries sustained while committing a crime
• Injuries sustained during a protest or riot
• Recovery from cosmetic or other elective surgeries

Of course, it’s important to remember that coverage can vary significantly from policy to policy. Check with your employer or insurance provider if you’re unsure.

How does short-term disability work if I’m pregnant?

In some cases, short-term disability insurance from your employer may help cover maternity leave—replacing a portion of your salary while you’re out. This can be particularly helpful if you become too ill to work before you give birth or when you’re recovering from giving birth.

Unfortunately, this coverage doesn’t usually last the full 12 weeks that the Family Medical Leave Act gives you for maternity leave. It usually lasts around six to eight weeks. If you’re lucky, your employer might provide a family leave benefit to cover the rest of your time away from work.

Where do you get short-term disability insurance?

Typically, STD insurance is offered through your employer. Sometimes it’s part of your standard benefits (meaning you automatically get it), and sometimes it’s available for you to purchase. If you can’t get a policy through your employer, or what’s offered by your employer doesn’t replace enough of your salary, you can buy coverage yourself with supplemental disability insurance.

How much short-term disability insurance should you have?

Most STD policies replace between 40 and 70 percent of your regular earnings. Depending on your monthly budget, spending habits and other available savings, this could be a good range to aim for. If you need help estimating your coverage needs, start with this disability insurance calculator, which considers your age, income, monthly expenses, savings and other factors.

Then talk with your Northwestern Mutual financial advisor for help getting the right type and amount of coverage. That way, if you’re sick or injured, you can avoid depleting your savings, tapping into investments or pausing your retirement account contributions. Your advisor is there for you, even when life doesn’t go according to plan.



Not all contracts and optional benefits are available in all states. Disability insurance policies contain some features and benefits that may not be available in all states. The ability to perform the substantial and material duties of your occupation is only one of the factors that determine eligibility for disability benefits. These policies also contain exclusions, limitations and reduction-of-benefits provisions that could affect individual coverage. Eligibility for disability income insurance, additional policy benefits and qualification for benefits is determined on a case-by-case basis. For costs and complete details of coverage, contact your Northwestern Mutual financial representative.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life insurance, disability insurance, annuities, and life insurance with long-term care benefits).