Disability Insurance Guide

Relying solely on employer-provided disability insurance

Employer group policies often cover only 60% of base salary (excluding bonuses/commissions), use any-occupation definitions, and have lower maximum benefits. Plus, if your employer pays premiums, benefits are taxable — reducing your effective coverage to 40-45% of income.

Not buying disability insurance because 'it won't happen to me'

1 in 4 workers will experience a disability lasting 90+ days before age 67. Back injuries, cancer, heart disease, and mental health conditions are far more common causes than dramatic accidents. Your income is your most valuable asset — insure it.

Choosing any-occupation instead of own-occupation

Any-occupation means you must be unable to work ANY job. If you are a $200K/year software engineer who can technically work as a Walmart greeter, any-occupation would deny your claim. Own-occupation pays if you cannot do YOUR job. Worth the 10-30% premium increase.

Not supplementing employer coverage with a private policy

Even if your employer provides LTD, get quotes for a supplemental individual policy. Individual policies are portable (you keep them if you leave), cannot be cancelled by the insurer, and fill gaps in employer coverage.

Choosing too short a benefit period

The average long-term disability lasts 34.6 months. But you need to plan for worst-case scenarios. A benefit period to age 65 costs more than a 5-year benefit period but protects against the truly devastating scenario of never returning to work.