Disability insurance
Your ability to earn income is your most valuable financial asset — yet most people leave it almost entirely unprotected. We help you understand what you actually have and close the gap before you need it.
Your income is your most valuable asset
Many people consider their home to be their most significant financial asset. But for most working adults, the true foundation of their financial life is their capacity to work and generate income. The inability to work — whether due to illness, injury, or a disabling condition — can quickly lead to financial ruin for an otherwise well-prepared household.
Everyone understands the consequences of job loss. But the probability of a serious disability is a risk that far fewer people account for in their planning. According to actuarial data, 30% of all Americans between the ages of 35 and 65 experience a disability lasting at least 90 days.¹ The risk is real — and the question is not whether to plan for it, but how.
Why Social Security and group plans often fall short
Most people assume a combination of Social Security disability benefits and an employer-sponsored group plan provides adequate protection. In practice, both sources have significant limitations that leave substantial gaps for working professionals.
A very narrow safety net
The Social Security definition of disability is highly restrictive — applicants must prove they cannot perform any substantial gainful work in the national economy. In 2019, only 36.9% of initial SSDI claims were approved.² Even for those who qualify, benefits may take months or years to begin.
60% that may be worth far less
Employer plans rarely replace more than 60% of monthly salary, and many cap monthly benefits at a dollar figure. Critically, if the employer paid the premiums without including them in your taxable income, all benefits are fully taxable — reducing real replacement income to roughly 40–45%. And group coverage ends when employment does.³
Five things to evaluate in an individual disability policy
When group coverage is insufficient or unavailable, individual disability income insurance fills the gap. Individual policies cost more than group coverage, but premiums paid with after-tax dollars mean all benefits are received income-tax free. More importantly, an individual policy is portable — it stays with you regardless of employer — and its terms cannot be unilaterally changed by the carrier.
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01
Carrier financial strength
A disability policy is a decades-long contract. You need confidence the company will be there to pay a claim 20 years from now. We evaluate AM Best, Moody's, and S&P ratings before recommending any carrier.
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02
Definition of disability
This is the most critical policy term. An own-occupation definition pays benefits if you cannot perform the duties of your specific occupation — even if you could work in a different field. A more restrictive any-occupation definition requires you to be unable to work in any capacity. For physicians, attorneys, and other specialists, own-occupation coverage is essential.
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Elimination period
The waiting period before benefits begin — typically 60, 90, or 180 days. A longer elimination period lowers premiums but requires adequate savings to bridge the gap. We help you align this with your actual cash reserves.
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Benefit period
How long benefits are paid — from 2 or 5 years to age 65 or lifetime. For most working professionals, a benefit period to age 65 is the right baseline. A severe disability early in a career could leave decades of income unprotected with a shorter benefit window.
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Inflation protection
A benefit amount fixed today may represent far less purchasing power 15 years into a disability. A cost-of-living adjustment (COLA) rider increases benefits in line with inflation, preserving the real value of your income protection over time.
Working-age disability is more common than most realize
While most Americans insure their homes, cars, and lives, many fail to protect their most valuable asset — the ability to earn an income. Federal census data on the civilian non-institutionalized population shows how significantly disability affects working-age Americans at every stage of a career.
| Age Group | Approx. Population with a Disability | Rate |
|---|---|---|
| 18–34 | 3.7 million | 5.0% |
| 35–44 | 3.5 million | 8.7% |
| 45–54 | 5.4 million | 13.4% |
| 55–64 | 8.6 million | 24.0% |
The probability of disability accelerates sharply as you approach retirement age — exactly when the financial consequences of lost income are most severe. Planning while you are still young and insurable is the most cost-effective approach.
¹ Based upon the 1985 Commissioners' Individual Disability Table.
² SSA Annual Statistical Report on the Social Security Disability Insurance Program, 2021 (November 2021). Table 61: Medical decisions at the initial adjudicative level, by year of application and program, all decisions.
³ The discussion of tax treatment concerns federal income tax law only. State or local law may vary. Employees who pay premiums with after-tax dollars receive disability benefits income-tax free.
⁴ U.S. Census Bureau, 2019 American Community Survey 1-Year Estimates. Sex by Age by Disability Status, civilian non-institutionalized population. Table B18101. Figures are approximate.
Frequently Asked Questions
What clients ask most often about protecting their income.
Group disability is a starting point, but for most professionals it leaves a significant gap. The three core problems are replacement rate, taxability, and portability. Most group plans cap benefits at 60% of base salary — which sounds reasonable until you factor in that if your employer paid the premiums without including them in your taxable income, all of that benefit is taxed as ordinary income when you receive it. After taxes, real replacement income for many professionals is closer to 40–45%.
The definition of disability also matters. Many group plans use an own-occupation definition for the first two years, then switch to any-occupation — meaning benefits can stop if you're deemed capable of performing any job, even if you can no longer do your specific profession. And group coverage ends when you leave your employer. An individually owned, non-cancelable policy follows you through any job or career change, and its terms cannot be altered by the carrier.
The definition of disability in your policy determines whether you collect benefits — and it's the single most important term to understand when comparing policies. An own-occupation definition pays benefits if you become unable to perform the material duties of your specific occupation, even if you're still capable of working in another field. A surgeon who loses the use of their hands collects full benefits under an own-occupation policy, even if they could theoretically teach or consult.
A more restrictive any-occupation definition requires that you be unable to perform any gainful work — a far higher threshold that can result in benefit denials for people who are genuinely unable to continue their career. Some policies will allow you to work in a different occupation and still collect partial disability benefits. For physicians, dentists, attorneys, executives, and other highly specialized professionals, own-occupation coverage is the standard we recommend. It is typically available only through individual policies — not group plans — which is another reason individual coverage matters for high-earning professionals.
The standard goal is to replace 60–70% of pre-disability gross income — enough to maintain your standard of living while accounting for the reduction in work-related expenses (commuting, meals, professional clothing). The reason coverage doesn't aim for 100% replacement is intentional: some financial incentive to return to work when able is built into the system by carriers and regulators.
The right number for your situation depends on your fixed obligations, your spouse's income, passive income sources, and how much of your spending is discretionary versus essential. We model this against your actual budget and current coverage, then identify the benefit amount that genuinely protects your household without over-insuring. Carriers also impose benefit limits as a percentage of earned income, so the analysis includes verifying what you can qualify for — and layering individual coverage on top of any group plan you already have.
Find out what your coverage actually pays.
We model your real after-tax disability benefit from group and Social Security sources — so you know exactly how much of your income is at risk.