Most people insure their car, their home, and their life. But they forget to insure the one thing that makes all of those payments possible: their ability to earn income.

The statistics are sobering. According to the Social Security Administration, 1 in 4 workers will experience a disability lasting 90 days or more before they reach retirement age. The average long-term disability claim lasts nearly three years. For most families, three years without income would be financially devastating.

What Is Disability Insurance?

Disability insurance replaces a portion of your income — typically 60–70% — if you become unable to work due to illness or injury. It's income protection, not health insurance. While health insurance pays your medical bills, disability insurance pays your mortgage, groceries, and everything else while you recover.

Short-Term vs Long-Term Disability

Short-term disability (STD) typically covers the first 3–6 months of a disability. Many employers include STD as part of their benefits package. Benefits usually replace 60–70% of your salary.

Long-term disability (LTD) kicks in after the short-term period ends and can provide benefits for years — or until retirement age, depending on the policy. This is the coverage that matters most for major illnesses like cancer, heart disease, or serious accidents.

What Counts as a Disability?

This depends heavily on how your policy defines disability. There are two main definitions:

  • Own-occupation: You're considered disabled if you can't perform the duties of your specific occupation. A surgeon who loses the use of their hands is disabled even if they could technically do another job. This definition is more generous — and more expensive.
  • Any-occupation: You're only considered disabled if you can't perform any job for which you're reasonably qualified. More restrictive and more affordable.

For professionals with specialized skills, own-occupation coverage is worth the extra cost.

How Much Does Disability Insurance Cost?

Expect to pay 1–3% of your annual income for a comprehensive long-term disability policy. A person earning $80,000/year would pay roughly $800–$2,400/year. Factors that affect your premium include:

  • Your occupation and physical risk level
  • Your age and health at time of purchase
  • The benefit amount and benefit period
  • The elimination period (waiting period before benefits begin)
  • Whether you choose own-occupation or any-occupation definition

The Elimination Period

The elimination period is the waiting period between when you become disabled and when benefits begin — similar to a deductible, but measured in time rather than money. Common options are 30, 60, 90, or 180 days.

Choosing a longer elimination period significantly reduces your premium. A 90-day elimination period is the most common choice — long enough to keep premiums manageable, short enough that a solid emergency fund (3–6 months of expenses) can bridge the gap.

Do You Need Disability Insurance If Your Employer Provides It?

Maybe — but check the details carefully. Most employer-provided LTD plans have significant limitations: they often cover only 60% of your base salary (not bonuses or commissions), benefits are typically taxable if your employer pays the premiums, and coverage ends the moment you leave your job.

An individual disability policy follows you between jobs and can be structured to meet your specific needs. If your employer plan has gaps, supplemental coverage is worth considering.

Calculate Your Coverage Need

Use our Disability Insurance Calculator to find out how much coverage you need based on your income, expenses, and existing coverage.