Disability Insurance 101

Did you know that May is Disability Insurance Awareness Month? In the realm of financial planning, a key component is disability insurance. While many people understand the importance of health insurance and life insurance, disability insurance often does not receive the same attention. However, its significance cannot be understated. Here’s why disability insurance is essential for your financial security.

Understanding Disability Insurance:

Disability insurance provides income replacement if you are unable to work due to illness or injury. It ensures that you can maintain your standard of living even when you are not able to earn a paycheck. This form of insurance is vital because it covers a gap that other insurance policies do not.

For example, let’s say a person made $100,000 per year before they became disabled. This prohibits them from continuing to work, so their disability insurance will compensate them for a portion of their lost income, if they qualify. In this regard, it covers the worker’s lost opportunities.

Why Disability Insurance is Important:

  • Income Protection: Your ability to earn an income is one of your greatest assets. Disability insurance protects this asset by providing you with a portion of your income if you become disabled.
  • Financial Stability: A prolonged period of disability can lead to financial instability. Bills such as mortgage payments, utilities, and daily living expenses do not stop when your income does.
  • Peace of Mind: Knowing that you have a safety net in place can reduce stress. This allows you to focus on recovery rather than worrying about your finances.
  • Comprehensive Coverage: Disability insurance often covers a wide range of conditions, from physical injuries to mental health issues. This broad coverage ensures you are protected in various scenarios.
  • Employer Benefits May Not Be Enough: While some employers offer disability insurance, it might not be sufficient. Employer-provided policies often cover only a percentage of your salary and may not include bonuses or commissions.
  • Self-Employed Individuals: For those who are self-employed, disability insurance is even more critical. Unlike traditional employees, self-employed individuals do not have an employer to provide benefits.

 Disability Insurance Market Size 2023-2033 (USD Billion)

Did You Know? 

The global market size reached USD 4.93 billion in 2024 and is estimated to hit around USD 12.89 billion by 2033.

Disability Insurance - ST-LT

Short-Term vs. Long-Term:

Disability insurance comes in two main types: short-term and long-term. The most significant difference between short-term and long-term is the length of time you will receive benefits if you are unable to work. This period is known as the benefit period. Understanding the differences between these can help you determine which is best for your needs.

Short-Term Disability Insurance:

  • Coverage Duration: Short-term provides coverage for a limited period, typically ranging from a few weeks to six months.
  • Waiting Period: The waiting period before benefits begin is usually shorter, often just a few days to a couple of weeks.
  • Benefit Amount: Short-term policies cover a higher percentage of your income, often between 60-80%.
  • Common Uses: This type of insurance is often used for temporary conditions such as recovery from surgery, childbirth, or minor injuries.
  • Employer Provided: Many employers offer short-term benefits as part of their benefits package.

Long-Term Disability Insurance:

  • Coverage Duration: Long-term provides coverage for an extended period, sometimes until retirement age or for the rest of your life.
  • Waiting Period: The waiting period is longer, typically 90 days (about 3 months) or more, before benefits begin.
  • Benefit Amount: Long-term policies cover a lower percentage of your income, usually between 40-60%.
  • Common Uses: This insurance is designed for more severe or chronic conditions that prevent you from working for a long time.
  • Individual Policies: Long-term is often purchased individually, especially if employer coverage is insufficient.

Key Features to Consider:

When selecting disability insurance, consider these key features:

  • Benefit Period: The length of time you will receive benefits. Longer benefit periods offer more protection but may cost more.
  • Elimination Period: The waiting period before benefits begin. Shorter elimination periods result in quicker payouts but higher premiums.
  • Coverage Amount: The percentage of your income that will be replaced. Higher coverage amounts provide more financial support but also come with higher premiums.
  • Definition: Policies define disability differently. Own-occupation policies cover you if you cannot perform your specific job, while any-occupation policies only cover you if you cannot perform any job.
  • Non-Cancellable: This feature guarantees that your policy cannot be canceled by the insurer if premiums are paid.
  • Residual Benefits: Provides partial benefits if you can work but earn less due to a disability.

Practical Steps to Secure Disability Insurance:

  • Assess Your Needs: Determine how much income you need to replace to maintain your standard of living.
  • Review Employer Coverage: Check if your employer offers disability insurance and whether it is adequate for your needs.
  • Consider Individual Policies: If employer coverage is insufficient, research individual policies.
  • Consult a Financial Advisor: A professional can help you understand your options and select the best policy for your situation.
  • Compare Policies: Shop around and compare policies from different insurers to find the best coverage at the best price.
  • Read the Fine Print: Ensure you understand the terms and conditions of the policy, including exclusions and limitations.


Disability insurance is a crucial component of a comprehensive financial plan. It provides essential protection for your income, ensuring financial stability during challenging times. Whether you opt for short-term or long-term coverage, having disability insurance can give you peace of mind and secure your financial future. Make sure to evaluate your needs, explore your options, and choose a policy that best suits your circumstances.

Want to talk about it?

If you have any questions, our Insurance Manager Greg Killilea is here to help.

Schedule a meeting with Greg directly by clicking HERE


Contact us at 781-235-4426 




Also, download our FREE guide on:

“What issues should I consider when purchasing Disability Insurance?” 

What issues should I consider when purchasing disability insurance



Because investor situations and objectives vary this information is not intended to indicate suitability for any individual investor. 

This is for informational purposes only, does not represent legal or tax advice does not indicate suitability for any particular investor, and does not constitute an offer to purchase or sell investments. Please consult the appropriate professional regarding your individual circumstance. 

Product guarantees are based on the claims-paying ability of the issuing company and assume compliance with the product’s benefit rules, as applicable. 

Advisory services are offered through Asset Strategy Advisors, LLC (ASA). Securities are offered through representatives licensed with either Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Insurance is offered through Asset Strategy Financial Group, Inc. (ASFG). ASFG and ASA are independent of CIS. 


This blog was written from the sources:


Share This Post With A Friend Or Family Member!