Despite the limitations, there are strategic reasons for layered coverage, particularly for high-income earners:
Benefits from employer-paid plans are usually taxable , whereas benefits from a policy you pay for yourself with after-tax dollars are generally tax-free . The "Interesting" Catch
While it is legally permissible to hold multiple policies—often referred to as —insurance companies are fundamentally designed to prevent "double dipping". Their goal is to ensure you do not make more money being disabled than you do while working, which would create a "moral hazard".
If you file a claim on two policies, one will typically be designated as "primary" and the other as "secondary". The secondary policy will likely offset (reduce) its payout by the amount you receive from the first.
The irony of buying multiple STD policies is that itself is rarely sold as a standalone individual product. Most private insurers prefer you to "stack" an employer-provided STD plan with a private Long-Term Disability (LTD) plan . This ensures you have immediate coverage for the first few months and more robust, high-limit protection if the injury turns out to be permanent. Can You Have Two Short-Term Disability Policies?