An illness or injury can stop you from working when you least expect it. Disability insurance provides a financial safety net, replacing part of your income so you can focus on healing without putting your family’s future at risk.
What Is Disability Insurance?
Disability insurance is a type of coverage that pays you a percentage of your income if a disabling condition prevents you from working. It acts like income protection: if you get injured or become seriously ill and can’t do your job, disability benefits can help cover everyday living expenses such as rent or mortgage, groceries, utilities, and medical bills.
There are two main types of disability insurance: short-term disability (STD) and long-term disability (LTD). Short-term coverage typically kicks in soon after a qualifying disability and lasts for several weeks or months, while long-term policies can provide income replacement for years or until retirement age, depending on the policy design.
Why Disability Insurance Matters
Most people understand the need for life insurance, but fewer realize that their ability to earn income is one of their most valuable financial assets. In fact, a disabling event, such as a severe injury, chronic illness, or mental health condition, can strike at any age and may last longer than expected.
Without disability insurance, many families are forced to deplete savings, reduce their standard of living, or rely on others for support. Disability benefits can help protect your lifestyle and financial goals by replacing a portion of your earned income, giving you breathing room to focus on recovery.
Short-Term vs. Long-Term Disability Insurance
| Feature | Short-Term Disability | Long-Term Disability |
|---|---|---|
| Benefit duration | Weeks to months | Years or until retirement age |
| Elimination period | 0–14 days | 30–180+ days |
| Typical benefit | ~50–70% of income | ~50–70% of income |
| Best for | Temporary injuries/illnesses | Long-term or permanent disabilities |
| Common use cases | Surgery recovery, broken bones, short illness | Disability from severe illness, chronic conditions |
What Disability Insurance Covers
Disability insurance is designed to replace part of your income if you’re unable to work due to a qualifying illness or injury. In general, disability insurance coverage may apply to disabilities caused by:
-
Accidents and injuries (for example, serious injuries or recovery from an accident)
-
Serious illnesses (such as cancer, heart disease, or stroke)
-
Chronic medical conditions that limit your ability to work over time
-
Mental health conditions when they prevent you from performing your job duties
Coverage details can vary by policy and insurer, so it’s important to understand your specific benefits, including any limitations, exclusions, and how your policy defines “disability.”
Important Policy Features to Know
Understanding key disability insurance policy features can help you choose coverage that fits your income, savings, and overall financial plan. The most important features to review include:
- Elimination period – The waiting period before benefits begin, commonly 30, 60, or 90 days
- Benefit period – How long benefits are paid, such as 2 years, 5 years, or until age 65
- Own-occupation vs. any-occupation definitions – Determines how disability is defined and when benefits are paid
- Partial disability benefits – May pay benefits if you’re able to work part-time or in a reduced role
- Residual disability benefits – Provides partial benefits when income is reduced but not completely eliminated
Understanding these features helps you tailor disability insurance coverage to your financial responsibilities, savings level, and risk tolerance, so there are fewer surprises if you ever need to use it.
Common Disability Insurance Mistakes
Many people don’t realize the limitations of disability insurance until they need it. Avoiding these common mistakes can help ensure your coverage actually protects your income when it matters most.
Common disability insurance mistakes include:
- Assuming employer-provided coverage is sufficient, when it often replaces only part of your income
- Choosing a benefit period that’s too short to support long-term recovery
- Ignoring own-occupation definitions, which can limit when benefits are paid
- Selecting a long elimination period without enough savings to cover expenses during the waiting period
- Failing to adjust coverage after major life changes, such as income increases, marriage, or new financial responsibilities
Disability insurance can help protect your most valuable financial asset, your ability to earn. Whether you’re comparing policies or want personalized guidance, you can get a quote online or call us at (800) 442-9899 to speak with a licensed advisor who can help you find the right coverage.
Disability Insurance: FAQs
What is disability insurance?
Disability insurance replaces a portion of your income if you’re unable to work due to an illness or injury. It helps you continue paying bills and living expenses when you can’t earn a paycheck.
Why is disability insurance important?
Most people rely on their income to support themselves or their family. Disability insurance protects that income if you become temporarily or permanently disabled. Statistically, a long-term disability is more likely than premature death during working years.
What are the main types of disability insurance?
The two primary types are:
-
Short-Term Disability (STD): Covers temporary disabilities, usually for a few weeks to months
-
Long-Term Disability (LTD): Covers long-lasting or permanent disabilities, often for years or until retirement age
Many people need long-term disability insurance for meaningful protection.
How much disability insurance coverage do I need?
Most policies replace 50–70% of your gross income. The exact amount depends on your income, expenses, employer benefits, and whether coverage is taxable.
Is employer-provided disability insurance enough?
Often, no. Employer disability insurance may:
-
Replace a smaller portion of income
-
Be taxable if premiums are employer-paid
-
End if you leave your job
-
Have limited benefit periods
An individual policy can provide stronger, portable protection.
What does disability insurance typically cover?
Disability insurance benefits can be used for:
-
Rent or mortgage payments
-
Utilities and groceries
-
Student loans and credit cards
-
Medical bills
-
Childcare expenses
There are no restrictions on how benefits are used.
What is the difference between “own occupation” and “any occupation”?
-
Own occupation: Pays benefits if you can’t work in your specific job
-
Any occupation: Pays only if you can’t work in any job
Own-occupation coverage is broader and generally more valuable.
What qualifies as a disability?
A disability is typically defined as a medical condition that prevents you from performing your job duties. Qualifying conditions can include:
-
Injuries
-
Chronic illnesses
-
Mental health conditions
-
Musculoskeletal disorders
-
Recovery from surgery
Definitions vary by policy.
How long do disability insurance benefits last?
Benefit periods vary and may last:
-
2, 5, or 10 years
-
Until age 65 or retirement age
Longer benefit periods provide greater long-term security.
What is an elimination period in disability insurance?
The elimination period is the waiting period between when a disability occurs and when benefits begin. Common elimination periods are 30, 60, 90, or 180 days. Longer elimination periods usually lower premiums.
Does disability insurance cover mental health conditions?
Many policies do cover mental health conditions such as anxiety or depression, though benefits may be limited in duration. Coverage details vary by insurer and policy.
Is disability insurance expensive?
Disability insurance is typically affordable relative to the protection it provides. Premiums are based on:
-
Age
-
Occupation
-
Income
-
Health
-
Coverage amount and benefit period
Many people pay just a few percent of their income for coverage.
Is disability insurance tax-free?
It depends on who pays the premiums:
-
If you pay premiums with after-tax dollars, benefits are usually tax-free
-
If an employer pays premiums, benefits are often taxable
This affects how much coverage you may need.
