Is Disability Insurance Worth It?
It’s not a fun question, but it’s an important one nonetheless: What would you do if you suddenly found yourself unable to work due to an injury, illness, or health condition? While many people protect the things mattering most to them—whether their home, car, health, or family—far fewer think about protecting their income. In fact, only 43% of working Americans had disability insurance in 2025 according to the Guardian’s most recent Annual Disability Report. Part of the likely reason? Future income feels less tangible than day-to-day concerns. It’s easy to assume an illness or injury is unlikely (especially if you’re young, healthy, or work at a desk), but losing even a few months of income can create real financial stress for many households—which is where disability insurance comes in.
This article breaks down how short-term, long-term, and other forms of disability insurance work, what they cost, how to get coverage, and how to decide what makes sense for you. Disability insurance is just one piece of a broader protection plan, however. To learn how it fits alongside life, health, long-term care, and other coverage, see our guide to insurance in retirement.
Key Takeaways
- What it does: Disability insurance replaces part of your income (typically 50%–70%) if an illness or injury keeps you from working, protecting the paycheck most people forget to insure.
- More likely than you'd think: More than one in four current 20-year-olds will experience a disability before retirement age, often from common issues like back pain, cancer, or surgery recovery (beyond just major accidents).
- The short-and-long-term tandem: Short-term coverage bridges the first few months; long-term guards against a lasting loss of income. Pairing them provides the most complete protection.
- The cost is modest: Long-term coverage usually costs about 1%–3% of your income, roughly $50–$150 a month for someone earning $60,000 annually.
- Start with what's cheapest: Group coverage via an employer or association is typically the easiest, lowest-cost option; buy an individual policy to supplement it or if you have none.
What is disability insurance?
Disability insurance replaces part of your income if an illness or injury keeps you from working. Unlike health insurance, which helps pay for medical care, disability insurance is meant to help with the financial consequences of not working. Most policies replace about 50% to 70% of your income (depending on the plan), and the goal isn’t to fully match your paycheck but instead help you stay afloat financially while you recover and try to keep up with regular obligations.
Is disability insurance worth it?
For many people, the answer is a resounding yes—especially if going without a paycheck for several months would create financial stress. According to the Social Security Administration, more than one in four 20-year-olds will experience a disability before reaching retirement age. When people think of disabilities, major accidents or severe injuries often come to mind. In reality, however, many disability claims are tied to more common issues like back pain, cancer, heart disease, surgery recovery, or chronic illnesses. The question is therefore less about whether such issues could happen and more about how you’ll respond financially if they do.
What types of disability insurance are available?
The two main forms of disability insurance are short-term (STD) and long-term (LTD) policies, designed to work in tandem to provide the strongest protection for many people.
Short-term disability insurance
Short-term disability serves to help right away if you’re unable to work due to an illness, injury, surgery, or childbirth. Short-term disability benefits usually begin within a few days to a couple of weeks and often last for three to six months—though some policies can extend up to a year—and typically replace around 60% to 70% of your income. This type of insurance helps cover immediate expenses while you recover or wait for long-term disability benefits to begin.
Long-term disability insurance
Long-term disability insurance is designed for more serious or ongoing situations keeping you out of work for an extended period of time, with benefits usually kicking in after a longer waiting period (often ~90 days) and sometimes lasting for several years or even until retirement age depending on the policy. Long-term disability typically replaces around 50% to 60% of your income, and many policies have monthly payout caps often ranging from ~$5,000 to $10,000+.
Combining short- and long-term insurance
If you have both types of coverage, short-term disability can help replace income during the waiting period before long-term benefits begin (e.g., doing so for the first three to six months if you become disabled and can’t work for a year). Having both types of policies can create a smoother financial transition during recovery—bringing money in right away rather than relying on savings, credit cards, or help from family while awaiting long-term benefits—and make it easier to stay on top of rent/mortgage payments, groceries, childcare, utilities, and other monthly expenses. Nevertheless, long-term disability is still the more important piece for many people (protecting against a larger loss of income); pairing it with short-term coverage can help close the gap and provide more complete protection from day one.
What conditions does disability insurance usually cover?
Most policies cover a wide range of conditions including*…
Injuries from accidents
Recovery from surgery
Chronic illnesses
Cancer, heart disease, and stroke
Musculoskeletal injuries (e.g., back pain, joint problems, or fractures)
Pregnancy complications or childbirth recovery
Some mental health conditions (e.g., anxiety or depression)
Neurological conditions such as multiple sclerosis or Parkinson’s disease
Serious infections or autoimmune diseases
Disabilities caused by repetitive strain or overuse injuries**
*Coverage varies by provider and policy. This is not a complete list, so it’s important to review the details of any plan you’re considering and/or speak with an insurance professional.
**Long-term disability policies also differ in how they define “disability,” some only paying benefits if you can’t work in any job while others doing so for only your specific job/profession.
- Injuries from accidents
- Recovery from surgery
- Chronic illnesses
- Cancer, heart disease, and stroke
- Musculoskeletal injuries (back pain, joints, fractures)
- Pregnancy complications or childbirth recovery
- Some mental health conditions (anxiety, depression)
- Neurological conditions (MS, Parkinson's)
- Serious infections or autoimmune diseases
- Repetitive-strain or overuse injuries
- Pre-existing conditions (policy-dependent)
- Self-inflicted injuries
- Disabilities tied to drug or alcohol misuse
- Injuries while committing a crime
- Disabilities from war or military service
- Routine pregnancy and childbirth
- Cosmetic or elective procedures
- High-risk hobbies (skydiving, rock climbing)
- Some mental health conditions (policy-dependent)
- Minor issues that don't stop you working
What conditions does disability insurance usually NOT cover?
Most disability insurance policies have exclusions, limitations, or waiting periods for specific conditions and situations. Common exclusions may include…
Pre-existing conditions, depending on the policy
Self-inflicted injuries
Disabilities related to drug or alcohol misuse
Injuries sustained while committing a crime
Disabilities caused by war or military service
Routine pregnancy and childbirth
Cosmetic or elective procedures
Injuries tied to high-risk hobbies or activities (e.g., skydiving or rock climbing)
Some mental health conditions, depending on the policy
Minor illnesses or injuries that don’t prevent you from working
As with covered conditions, exclusions vary by policy so it’s important to review the details carefully before choosing coverage.
Who should consider disability insurance?
Not everyone needs the same amount of disability coverage, but if losing your paycheck would quickly put pressure on your finances, it may be worth taking a closer look; we walk through income protection as one core coverage in Six Types of Insurance Everyone Needs, the foundation most households should have in place.
Disability insurance may be worth considering if…
Other people rely on your income
If you help support a spouse, child(ren), or other family members, losing your paycheck could affect more than just your own finances. Disability insurance can help keep up with essentials like housing, groceries, childcare, and debt payments.
You’re self-employed or run your own business
A disability can make it difficult to manage both personal and business expenses without access to employer-sponsored benefits.
Your job depends on specialized skills
Some professions rely heavily on specific physical or technical abilities (e.g., a dentist, surgeon, or electrician may not be able to continue working if they lose mobility or develop a chronic condition). In such cases, “own occupation” disability coverage is especially valuable.
You have access to group coverage through work
If your employer offers disability insurance, it may be easier and less expensive to enroll than it would be to buy an individual policy on your own.
You lack a large financial cushion
If you don’t have enough savings to cover months or years without income, disability insurance can help provide some peace of mind in this respect.
Disability insurance may be less of a priority if…
You’re retired or no longer earning income
If you’re not relying on a paycheck, you may not need to replace income.
You have substantial savings or passive income
If you can comfortably cover your expenses for an extended period of time without working, disability insurance is perhaps not necessary.
You already have robust disability coverage
Some employers, unions, and pension plans already provide generous disability benefits.
You have another reliable source of support
If a spouse, partner, or other family member can comfortably support your household without any financial strain, disability insurance is perhaps less of a priority.
How much do disability insurance policies cost?
In general, long-term disability insurance costs about 1% to 3% of annual income. For someone earning $60,000 per year, that means paying roughly $50 to $150 per month for coverage. Short-term disability insurance is often priced similarly, though it sometimes costs slightly more since benefits begin sooner and waiting periods are shorter.
What can influence disability insurance costs?
Your age and overall health
Whether you smoke
Your gender
Your occupation and risk level
Your income and how much you want to replace
How long you want benefits to last
How quickly you want benefits to begin
Whether the policy uses an “own occupation” or “any occupation” definition
Whether you participate in “high-risk” hobbies
Any extra features or riders you add to the policy
Broader coverage generally costs more. For example, a policy that replaces a larger share of income, offers benefits sooner, or pays benefits until retirement age usually has a higher premium.
Optional add-on riders
Common disability insurance rider examples include…
Cost-of-living adjustments, helping benefits keep pace with inflation
Guaranteed renewable coverage, preventing insurers from canceling policies so long as premiums are paid
Residual or partial disability coverage, paying partial benefits if you’re still able to work part time but earning less due to a disability
If you’re shopping for disability insurance, it’s often helpful to compare several policies and work with a broker or financial professional to find coverage best fitting your budget and needs.
Other sources of disability coverage
If short- or long-term disability insurance isn’t the right fit for your budget or needs, other programs can still provide some financial support if you find yourself unable to work. The following options can help, but they usually come with lower benefit amounts, shorter coverage periods, and/or stricter eligibility requirements:
Social Security Disability Insurance (SSDI) may provide benefits if you have a qualifying disability, but the approval process is often lengthy and difficult. Benefits are also generally modest compared to a regular paycheck.
State disability programs are available in California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico, typically providing short-term coverage for a few months. For those here in New Jersey, the state's Temporary Disability Insurance (TDI) program can replace a portion of wages for up to 26 weeks when a non-work-related illness or injury keeps you from your job (though, like most state programs, the benefit is capped well below a full paycheck so is best viewed as a supplement rather than a substitute for personal coverage).
Workers’ compensation can replace a portion of income if you’re injured on the job, though most disabilities are caused by illnesses or non-work-related injuries not covered by workers’ comp.
How to procure disability insurance
Check employee benefits first
Many employers offer disability insurance and may cover some or all of the premium. Some workplaces also offer short-term disability coverage on an automatic basis.
Ask whether your employer offers voluntary disability insurance
Even if your company doesn’t pay for coverage, you may still be able to buy a policy via work at a lower group rate.
Look into coverage through professional organizations you belong to
Trade associations and industry groups sometimes provide discounted disability insurance to members.
Buy an individual policy if necessary
If you’re self-employed, lack workplace coverage, or want additional protection, you can buy disability insurance directly through an insurance company or broker. Individual policies are most commonly long-term disability plans.
Next steps
Thinking about disability insurance? First, consider any coverage you may already have access to via work, a professional association, the Social Security Administration, or a state disability program. From there, think about how long you could realistically cover expenses without a paycheck. If going without income for a few months would create financial stress, it’s perhaps worth exploring short- or long-term disability coverage. You don't necessarily need the most comprehensive policy available, the goal simply to find a level of protection best fitting your budget, financial responsibilities, and overall financial plan—enough coverage to keep an unexpected health event from derailing your longer-term goals.
Still have questions about disability insurance? Schedule a FREE discovery call with one of our CFP® professionals to get them answered.
Reviewed for accuracy
Benjamin Stark, CFP®
Financial Advisor and Director of Client Experience at Vision Retirement, with 10+ years as a financial advisor.
Read full bio →FAQs
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It all depends on who pays for the policy. Benefits are usually tax-free if you pay the premiums yourself with after-tax dollars. But they may be taxable if your employer pays for coverage, or if you pay through work with pre-tax dollars.
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Yes! Many people have a group disability policy through work and then purchase an individual policy to supplement it. Having more than one policy can help replace a larger share of your income if your employer-sponsored plan doesn’t provide enough coverage on its own.
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Once your benefit period ends, your disability payments stop even if you’re still unable to work—which is why it’s important to think carefully about how long you want coverage to last when choosing a policy. Some long-term disability plans only pay benefits for a few years, while others continue until retirement age.
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Yes, you can. Insurance companies may deny coverage based on various factors such as your age, health history, occupation, or pre-existing conditions; it’s generally easier and less expensive to qualify when you’re younger and in good health. Even if you’re approved, some conditions or activities may be excluded from your policy.
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Yes, you may be able to get disability coverage and collect insurance benefits provided your disability claim isn’t related to the pre-existing condition itself.
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To choose the right amount of coverage, calculate essential monthly expenses (such as housing, food, bills, and debts) and ensure your policy will replace enough of your income to cover those costs if you’re unable to work. Consider factors such as existing savings, other sources of income, and any employer-provided benefits when determining your coverage amount.
Disclosures:
This document is a summary only and not intended to provide specific advice or recommendations for any individual.
