Disability Insurance: Protecting Your Income When You Need

Disability insurance provides income protection if you become unable to work due to illness or injury. It replaces a portion of your income so you can continue covering living expenses, medical bills, and financial obligations when you can’t earn a paycheck.

What Is Disability Insurance?

Disability insurance is a type of income protection that pays you a monthly benefit if you are unable to work because of a disabling illness, injury, or condition. Unlike health insurance, which pays for medical expenses, disability insurance replaces lost income — often a critical financial safety net for individuals and families.

Why Disability Insurance Matters

Most people rely on their paycheck to cover essential costs such as:

• Rent or mortgage

• Utilities and groceries

• Car payments

• Student loans

• Insurance premiums

• Medical expenses

If an unexpected injury or illness prevents you from working, lost income can quickly lead to financial hardship. Disability insurance helps ensure that you can continue meeting your financial commitments without depleting savings or going into debt.

Types of Disability Insurance

Short-Term Disability Insurance

Pays a portion of your income for a short period, typically:

• 3 to 6 months

• Sometimes up to 12 months

This is helpful for temporary disabilities like recovery from surgery or short-term illness.

Long-Term Disability Insurance

Provides income replacement for an extended period — potentially until:

• You return to work

• You reach retirement age

• The policy benefit period ends

Long-term disability covers more serious or prolonged conditions.

Employer-Sponsored vs. Private Disability Insurance

Employer-Sponsored Plans
Many employers offer disability coverage as part of a benefits package. While valuable, these plans may:

• Replace a smaller percentage of income

• Have restrictive definitions of disability

• End when employment ends

Private Disability Insurance
Purchased individually, private disability insurance typically provides:

• Higher income replacement percentages

• Broader definitions of disability

• Portability if you change jobs

• More tailored coverage to your occupation and needs

How Disability Insurance Works

When you purchase disability insurance, your policy will include key components, such as:

Elimination Period

This is a waiting period — similar to a deductible — before benefits begin. Common choices include:

• 30 days

• 60 days

• 90 days

• 180 days

Longer elimination periods often result in lower premiums, but you must be prepared to cover expenses during that waiting time.

Benefit Amount

Most policies replace a percentage of your pre-disability income — typically:

• 50% to 70% of your income

This helps ensure you can maintain your standard of living while you are unable to work.

Benefit Period

The length of time benefits are paid, which can range from:

• A few years (e.g., 5 years, 10 years)

• To age 65 or retirement

Longer benefit periods offer greater financial security but may cost more in premiums.

Who Needs Disability Insurance?

Disability insurance is valuable for almost anyone who relies on earned income, including:

• Employees

• Self-employed professionals

• Business owners

• Gig workers and freelancers

• High earners with financial obligations

Even people with savings can benefit — disabilities can last months or years and exhaust savings faster than expected.

Real Risks Without Disability Insurance

• Lost income due to injury or illness

• Depleted savings or retirement funds

• Strain on family finances

• Difficulty paying rent/mortgage or bills

• Forced early withdrawal from long-term accounts

• Emotional stress compounding physical hardship

Many people underestimate the likelihood of disability. Statistics show that working-age adults are more likely to experience a long-term disability than die before retirement, making coverage prudent for most households.

Common Conditions Covered

• Back and spine injuries

• Cancer

• Heart attacks

• Stroke

• Severe illness or chronic disease

• Accidents and trauma

• Mental health conditions (depending on the policy)

Coverage applies when a medical condition prevents you from performing your job duties, as defined by the policy.

FAQ — Disability Insurance Essentials

Q: Does disability insurance cover all illnesses and injuries?
Coverage depends on the policy. Most cover a wide range of conditions, but read definitions carefully, especially regarding mental or self-reported conditions.

Q: What is the difference between “own-occupation” and “any-occupation”?

• Own-occupation: Benefits if you can’t work in your specific job.

• Any-occupation: Benefits only if you can’t work any job suited to your education and experience.
  Own-occupation coverage is often preferable for professionals.

Q: Do I need disability insurance if my employer provides coverage?
Employer coverage helps, but it’s often limited. Private policies typically offer stronger, more portable benefits.

Q: How are disability insurance benefits taxed?
If you pay premiums with after-tax dollars, benefits are generally tax-free. If your employer pays premiums, benefits may be taxable.

Q: Can I get disability insurance at any age?
Yes — most adults can purchase policies, though age and health affect pricing and eligibility.

How to Choose the Right Disability Insurance Policy

1. Evaluate your income and expenses — determine how much income you need replaced.

2. Compare elimination periods — shorter waits start benefits sooner but cost more.

3. Choose a benefit period — longer periods offer more protection.

4. Consider own-occupation coverage — especially for specialized professions.

5. Check policy definitions of disability — broader definitions provide better protection.

6. Review portability options — important if changing jobs or freelancing.

A professional broker can help match you with the best policy for your needs.

Is Disability Insurance Worth It?

For most people, yes. Disability insurance protects your greatest asset — your ability to earn — when unexpected health events occur. It can mean the difference between financial stability and hardship if you cannot work.

Protect Your Income — Get a Personalized Quote Today

Life can change in an instant — make sure your income is protected when you need it most.
Fill out the form below to receive customized disability insurance options tailored to your situation.
Start now — secure your financial future.