Temporary Incapacity Insurance vs Short‑Term Disability Insurance: Is There a Difference?

One of the more confusing areas of employee benefits is disability insurance, largely because different insurers (and different parts of the world) use different terms.

We’re sometimes asked:

“What’s the difference between Temporary Incapacity insurance and Short‑Term Disability (STD) cover?”

Two Names for the Same Thing

In practice, Temporary Incapacity cover and Short‑Term Disability cover refer to the same benefit.

• Temporary Incapacity is the term more commonly used by global insurers in Europe and international group plans.
• Short‑Term Disability (STD) is the term you’ll hear most often in the United States and Canada.

Both provide income replacement for an employee who cannot work due to illness or injury but is expected to recover.

How It Works

These benefits typically:

• Replace a percentage of the employee’s base salary (often 50%–75%)
• Begin after a short waiting period (commonly 30 days)
• Continue for a fixed period – often up to 6 months, 12 months, or occasionally 24 months
• End when the employee recovers, returns to work, or transitions to long‑term benefits

This makes Temporary Incapacity/STD an important bridge between sick leave and long‑term disability cover.

How Does It Fit with Permanent Incapacity (Long‑Term Disability)?

Permanent Incapacity is another global term – essentially the same thing as Long‑Term Disability (LTD).

LTD or Permanent Incapacity cover applies when an employee’s condition is unlikely to improve enough for them to return to work in the foreseeable future. It usually:

• Starts after Temporary Incapacity/STD benefits end
• Can continue until a set age (for example, retirement age) or until recovery
• Often provides a similar percentage of salary replacement as Temporary Incapacity but over a much longer term

In other words, Temporary Incapacity (STD) protects income during the first months of an illness or injury, while Permanent Incapacity (LTD) is designed for long-term or permanent conditions.

READ MORE >> What Is LTD Insurance – And How Does It Work With Sick Leave and Short-Term Disability Insurance?

Why Employers Should Pay Attention to These Terms

For employers, understanding these terms is critical when designing benefits packages:

• Global vs local language: When reviewing international insurance proposals, don’t be confused by unfamiliar terms. “Temporary Incapacity” = “Short‑Term Disability.” “Permanent Incapacity” = “Long‑Term Disability.”
• Coordination of benefits: The waiting periods and benefit durations need to be aligned so there’s no gap in income protection for your employees.
• Attracting and retaining talent: In a competitive market, robust disability coverage sends a strong signal that you value the wellbeing of your team — particularly for globally mobile staff who may not have access to strong state protections.

Clear Language, Consistent Protection

Temporary Incapacity and Short‑Term Disability are two different names for the same type of insurance.

And when paired with Permanent Incapacity or Long‑Term Disability cover, they form a comprehensive safety net to protect employees from the financial impact of serious illness or injury — whether temporary or permanent.

At One World Cover, we help globally minded employers navigate these differences and ensure their benefits align across jurisdictions, so employees everywhere have the protection they need. Contact us for quote today.

To learn more please get in touch: [email protected] or click here to contact us.