Your most valuable asset isn’t your house, car or retirement account. It’s the ability to make a living.
The chance of missing months or years of work because of an injury or illness may seem unlikely, especially if you’re young and healthy and you work at a desk. But more than one in four 20-year-olds will experience a disability before they reach retirement age, according to the Social Security Administration.
What is disability insurance?
Disability insurance pays a portion of your income if you can’t work for an extended period because of an illness or injury. It’s worth looking into if you rely on a paycheck for everyday and recurring expenses.
Types of disability insurance
There are two main types of disability insurance — short-term and long-term coverage. Both replace part of your monthly base salary up to a cap, such as $10,000, during disability. Some long-term policies pay for extra additional services, such as training to return to the workforce.
Short-term vs. long-term disability insurance
Short-term disability insurance | Long-term disability insurance |
|---|---|
Typically replaces 60% to 70% of base salary. | Typically replaces 40% to 60% of base salary. |
Pays out for a few months to one year, depending on the policy. | Benefits end when the disability ends. If the disability continues, benefits end after a certain number of years or at retirement age. |
May have a short waiting period, such as two weeks, after you become disabled and before benefits are paid. | A common waiting period is 90 days after disability before benefits are paid. |
Disability policies vary in how they define “disabled.” Some policies pay out only if you can’t work any job for which you’re qualified. Others pay out if you can’t perform a job in your occupation. Some policies cover partial disability, which means they pay a portion of the benefit if you can work part time. Others pay only if you can’t work at all.
Why you need disability insurance
It’s natural to think “it’s not going to be me,” but this can be a limited way of thinking. People may shrug off the risk by focusing on worst-case scenarios, such as spinal cord injuries or accidents that result in amputation. But back injuries, cancer, heart attacks, diabetes and other illnesses lead to most disability claims.
The key questions to ask yourself include: What would you do if you couldn’t work? How far could you go without a paycheck?
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How much disability insurance do you need?
When you’re thinking about buying long-term disability insurance, ask yourself these questions.
💸 How much of your income would you need to replace?
Think not just about what you’d need to pay your bills but about how much it would take to maintain your lifestyle if you became disabled and couldn't work. This can help you determine which monthly benefit to select.
⏰ How long could you wait for disability benefits to kick in?
This will determine the "elimination period" — the number of months you would wait after becoming disabled for the policy to pay out. A typical elimination period is 90 days, but you can choose shorter or longer periods. The longer the elimination period, the lower the insurance price.
📅 How long would you want the benefits to last?
For some trades, such as plumbing and carpentry, benefits that extend more than five years can be prohibitively expensive.
For desk jobs, you can choose a benefit period to last a certain number of years or up to a certain age, such as 65. Generally, the longer the benefit period, the higher the price of the policy.
🤕 How broadly would you define "disability"?
Highly skilled people who have invested a lot of money in training may want a policy that pays out if they can't work in their specialty. A neurosurgeon who can no longer operate might still be able to teach or work as a general practitioner. But those positions would pay far less than a career as a surgeon.
Another consideration: Do you want a policy that pays out a portion of the benefits if you are partially disabled, meaning you can work only part time? People who suffer a disability often cut back on their hours, either as their condition worsens or as they recover from an injury or illness.
How to get disability insurance
Here are ways to get coverage:
Sign up for employer-sponsored coverage at work. Most employers that offer disability insurance pay some or all of the cost of premiums. There are five states that provide or require employers to provide short-term disability benefits. These states include California, Hawaii, New Jersey, New York and Rhode Island.
Look into disability insurance through the workplace. Some employers don’t pay for disability coverage but offer it as a voluntary benefit. This lets employees buy coverage through the employer’s insurance broker at a group rate.
Get disability insurance through a professional association. Many professional groups offer members coverage at group rates.
Buy an individual disability insurance plan. You can get one through an insurance broker or directly from an insurance company. Big sellers of individual disability insurance include Guardian, MassMutual, Northwestern Mutual and Principal. Most individual disability policies sold are for long-term coverage. However, some companies also offer short-term policies.
Features of employer-sponsored and individual disability insurance
Employer-paid disability insurance | Individual disability insurance |
|---|---|
Easy to qualify for the basic benefit. | Coverage is portable (moves with you to new jobs). |
Premiums are no cost or low cost to you. | Benefits can be customized to fit your needs. |
Insurance payouts are usually taxable. | Choice of insurance companies. |
Buying your own disability policy
Consider buying a policy if you don’t have any or enough disability coverage at work or are self-employed. Employer-sponsored disability insurance usually pays only a portion of your base salary, up to a cap. It’s a good idea to supplement that coverage if your salary far exceeds the cap or you depend on bonuses or commissions.
An insurer will consider other sources of disability insurance to determine how much coverage you can buy. Generally, you can’t replace more than 70% of your income from all the coverage combined.
Buying your own policy lets you:
Customize the coverage. You can choose extra features, such as annual cost-of-living adjustments.
Choose the insurance company. You won’t be locked into your employer’s insurer of choice, so you can choose a company with the best offerings.
Keep the coverage when you change jobs. Employer-paid coverage ends when you leave the company. (You might be able to take the coverage if you pay the full premium for disability insurance offered through the workplace.)
Control the disability insurance. The coverage stays intact as long as you pay for it. But employer-sponsored coverage ends if the employer decides to stop providing disability benefits.
Collect benefits tax-free if you become disabled. If the employer pays for the coverage, you must pay taxes on the benefits.
The cost of disability insurance
The annual price for a long-term disability insurance policy generally ranges from 1% to 3% of your annual income. A variety of factors affect the cost.
Your age and health.
Similar to life insurance, you’ll pay more for a policy the older you are and the more health problems you have. This is because the risk of developing a disability becomes greater.
Your gender.
Women usually pay more because they tend to file more claims for disability, on average.
Your smoking habits.
As with life insurance, you pay less if you don’t smoke or use other tobacco products.
Your occupation.
You’ll pay more if you work in a job with a high risk of injuries.
Your definition of disability.
The broader the definition of disability, the higher the premium. A policy will cost more if it covers you when you can’t work in your own occupation but could earn income in a lower-paying job.
Your waiting period.
This is known as the elimination period. You can reduce the premium by increasing the waiting period before benefits kick in.
Your income.
The more income you have to protect, the more you’ll pay for coverage.
Length of benefits.
The longer the period that the policy promises to pay out if you become disabled, the more you’ll pay in premiums.
Extra features.
Additions like cost-of-living adjustments to protect against inflation could increase costs.
Other ways to find disability insurance
The following programs also offer financial help in case of a disability, but they have limitations.
Social Security disability insurance
Social Security pays disability benefits, but it’s difficult and time-consuming to qualify, and the payments are low. The average monthly disability benefit in April 2026 was $1,816, according to the Social Security Administration.
State disability programs
State disability programs are offered in California, Hawaii, New Jersey, New York and Rhode Island. These provide short-term disability coverage according to Life Happens, an insurance industry trade group.
Workers' compensation insurance
Workers' compensation insurance replaces some income if you’re disabled due to a work-related injury. All states require employers to have workers' compensation coverage for their employees. Most long-term disabilities, however, are not the result of work-related injuries.
Disability income rider
For an additional cost, you can add a disability income rider to a life insurance policy. This rider is a policy add-on that can provide monthly payments if the policyholder is disabled and can’t work. Payouts are often a percentage of the policy’s total coverage or face amount.
Although these options might help, they don’t fully cover the risks of losing the ability to work after an illness or injury. Disability insurance is the smart bet to provide a safety net for your future.
Do I have to pay taxes on disability income?
How does disability insurance work if you're self-employed?
Is disability insurance worth it?
Article sources
- 1.Social Security Administration (SSA). Disability Benefits. Accessed May 26, 2026.
- 2.Social Security Administration. Disabled Worker Average Benefits. Accessed May 26, 2026.
- 3.Life Happens. How do I get disability insurance?. Accessed May 26, 2026.
