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Individual & family health

Disability income insurance

Your ability to earn is the asset every other plan depends on, and it is the one most people never insure. Disability income replaces a portion of your paycheck if illness or injury stops you working.

Ask about Disability income (800) 657-4213

Worth considering if

  • You are self-employed and have no employer disability plan at all
  • Your employer plan replaces less income than you could live on
  • You are a high earner whose group plan caps out well below your salary
  • Your household could not cover its fixed costs on one income for a year
  • You have a specialized occupation and want an own-occupation definition

Watch out for

  • Group coverage through work is often taxable and often insufficient
  • The definition of disability — own occupation versus any occupation — changes everything
  • Elimination periods mean benefits do not start immediately
  • Mental health and musculoskeletal claims are frequently limited to two years
  • Coverage bought after a diagnosis will exclude the condition, if it is offered at all

The definition of disability is the whole policy

Two policies can pay the same monthly benefit for the same premium and be worth completely different amounts, because they define “disabled” differently. An any-occupation policy pays only if you cannot perform any job you are reasonably suited to by education and experience. An own-occupation policy pays if you cannot perform the material duties of your own occupation — even if you could do something else.

For a surgeon with a hand tremor, a dentist with back problems, or anyone whose income depends on a specific skill, that distinction is the difference between a policy that pays and a policy that argues. True own-occupation coverage will even continue paying if you retrain and earn income in a different field.

Read this section of any policy before you read the price. It is the part that determines whether the product works on the day you need it.

Definitions of disability, from strongest to weakest
DefinitionPays whenEffect on you
True own-occupationYou cannot perform your own occupation, regardless of other workStrongest; you may work elsewhere and still collect
Own-occupation, not workingYou cannot perform your own occupation and are not workingStrong, but working elsewhere ends the benefit
Transitional own-occupationYou cannot perform your own occupation; benefit offsets new earningsReasonable middle ground
Any-occupationYou cannot perform any suitable occupationWeakest; hardest to claim on

Short-term versus long-term

Short-term disability typically begins within days or weeks of a covered disability and pays for a few months. It handles recovery from surgery, a difficult pregnancy, or an injury that keeps you off work for a season. Long-term disability begins after an elimination period of 90 days or more and can pay for years or to retirement age.

If you can only afford one, buy the long-term policy. A three-month absence is painful; a three-year absence is financially catastrophic, and it is the catastrophic case insurance exists to solve. Savings can bridge a short gap. Nothing bridges a permanent one.

How the elimination period changes the price

The elimination period is the waiting time between the start of your disability and the first benefit payment. It functions exactly like a deductible measured in days, and it is the most powerful lever on the premium. Moving from a 90-day to a 180-day elimination period can reduce cost meaningfully, and it is a sensible trade if you hold enough cash to self-fund those extra three months.

The right elimination period is the longest one your emergency fund can genuinely cover. Choosing a short one and then finding the premium unaffordable in year three is worse than choosing a long one you can keep paying for thirty years.

Frequently asked questions

Is not Social Security Disability enough?

For most working households, no. Social Security Disability Insurance uses a strict definition — you must be unable to engage in substantial gainful activity — approval commonly takes many months and frequently requires appeal, and the benefit is modest relative to most professional incomes. It is a floor, not a plan.

I have disability coverage through work. Do I need more?

Look at three things: what percentage of income it replaces, whether there is a monthly dollar cap that bites at your salary, and whether the benefit will be taxable. Group plans commonly replace 60 percent of base salary only, cap the monthly amount, exclude bonus and commission income, and pay taxable benefits. For higher earners the real replacement rate is often well under half.

What does disability insurance cost?

Individual long-term disability commonly runs one to three percent of annual income, driven by your age, occupation class, health, benefit amount, elimination period, benefit period and riders. Occupation class matters enormously — the same benefit costs a very different amount for an accountant and a roofer.

Can I buy it after I am already sick?

Realistically, no. Disability insurance is medically underwritten and any existing condition will be excluded by rider if the policy is issued at all. This is a product you buy while you are healthy and do not need it, which is precisely why so many people never get around to it.

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