Who needs disability insurance?

You probably understand why you need life insurance: if you died and left loved ones without your income, how would they get by? Life insurance offers valuable financial protection for your beneficiaries. They can use this money to pay for funeral expenses, pay off debt, and meet other financial obligations.

But what would happen if you became disabled and couldn’t work? Without your income, you and your family might struggle to keep up with the mortgage or rent, utility bills, food, health care, and other day-to-day expenses. And the longer you remain disabled, the bigger the financial hardship you face. Think of disability coverage as insurance for your paycheck. Disability insurance pays you a percentage of your income if you became unable to work due to an eligible illness or injury. Short-term disability insurance provides benefit payments during a brief disability (up to a few months or so), while long-term disability insurance protects you from the long-term financial burden of an extended or permanent disability.

However, a lot of people believe they’re not going to become disabled and therefore don’t need disability insurance. Unfortunately, it’s more common than you might think.

A working-age person (25 to 65 years old) is six times more likely to experience a disability that puts them out of work for 90+ days than to die. The COVID-19 pandemic has certainly shown that disabilities can happen to anyone at any time. Coronavirus survivors known as “long haulers” are struggling to recover from residual effects of their illness, with some experiencing debilitating symptoms.

Another possible reason people put off buying disability coverage is they’re concerned about the cost. But disability insurance is relatively inexpensive — typically around 1 to 3 percent of your annual salary.

Here are some questions to help you determine if you need disability insurance:

  • Does your work-related income provide essential financial support for you and/or your loved ones?
  • Do you have enough savings to replace your income if you became disabled and couldn’t work?
  • How much disability coverage do you receive through company-paid benefits? Does it cover both short-term and long-term disabilities?

Explore this benefits website to learn more about the disability insurance options available to you. Keep in mind that if you decline disability coverage when you first become eligible and later want to enroll, you will likely need to provide Evidence of Insurability (EOI), which involves providing information about your health status. If applicable, this EOI assessment will determine your eligibility for coverage.


“As a financial planner, I wish more people had disability insurance and understood 4 things about it,” by Sharif Muhammad, Insider (www.businessinsider.com), August 20, 2020
“Hardly anyone has enough disability insurance when the reality of a pandemic makes it more important than ever,” by Ronda Lee, Insider (www.businessinsider.com), October 7, 2020