The Risk of Disability Is Higher Than Most People Think
Disability income insurance is one of the most overlooked pillars of personal financial planning, yet the risk of experiencing a disabling illness or injury during your working years is far more common than most Americans realize.
According to an ACLI analysis of 2022 U.S. Census data, 53.7% of non-retired households, roughly 51.2 million in total, did not report having disability insurance beyond the basic coverage available through Social Security. The problem isn’t that people dismiss the risk entirely — it’s that they significantly underestimate how likely a disability is, and how financially devastating it can be.
What Is Disability Income Insurance?
DI insurance is a type of income protection coverage that replaces a portion of your earnings if you become unable to work due to illness, injury, or another qualifying medical condition. It exists in two primary forms:
- Short-term disability income insurance typically covers a portion of income for weeks to a few months
- Long-term disability income insurance can provide income replacement for years, or even until retirement age
Your income is your most valuable financial asset. DI insurance exists to protect it.
Who Needs Disability Income Insurance?
Disability income insurance makes financial sense for virtually all working adults, regardless of age, profession, or employment status:
- Millennials and younger workers whose earning potential is their greatest asset at this stage of life
- Mid-career professionals whose employer-sponsored group disability coverage may be insufficient to fully replace their income
- Self-employed and independent workers who have no employer-provided coverage at all
- Small business owners who need to protect both personal income and business continuity
How Common Is Disability During Working Years?
Many people assume disability only happens to others, but the statistics tell a different story. A significant portion of working-age Americans will experience a disabling condition at some point in their careers. Common causes include musculoskeletal disorders, cancer, cardiovascular conditions, mental health conditions, and accidents.
More recently, COVID-19 has added a new layer of complexity. Carol A. Harnett, President of the Council for Disability Awareness, has noted that “Covid claims became a top five cause of short-term disability” on the group insurance side. While acute COVID claims appear to be declining in that ranking, long-term and individual disability claims may continue to be affected by individuals experiencing ongoing symptoms, commonly referred to as “long Covid.”
Why Social Security Disability Income Insurance (SSDI) Often Isn’t Enough
Many workers assume Social Security will cover them if they become disabled. In reality, SSDI has strict eligibility requirements, a lengthy application and approval process, and benefit amounts that are often far below what a person needs to maintain their standard of living.
Private disability income insurance, whether through an employer group plan or an individual policy, is designed to fill that gap and provide meaningful income protection.
How Disability Income Insurance Fits Into Your Overall Financial Plan
According to Carol A. Harnett of the CDA, disability income insurance occupies a critical middle position in the employee benefits hierarchy:
“Health insurance is the most important benefit you can select. Providing protection for your income through disability insurance is the next biggest player underneath the employee benefits umbrella. And your retirement planning is critically important; in many ways, it’s another form of income insurance that pays out once you’re no longer working.”
This framing is helpful: think of disability income insurance as a bridge between your health coverage and your retirement planning and protecting the income that funds both your present life and your future security.
Key Questions to Ask When Evaluating Disability Income Insurance Coverage
When reviewing your current coverage or shopping for a new policy, consider:
- What percentage of my income would be replaced? (Most policies cover 60–70% of pre-disability income)
- How long is the elimination period? (The waiting period before benefits begin)
- How long will benefits last? (Short-term vs. long-term duration)
- Does my employer’s group plan provide sufficient coverage for my income level?
- Is an individual policy needed to supplement or replace group coverage?
Get Personalized Guidance on Disability Income Insurance
Understanding the basics of disability income insurance is a starting point — but finding the right coverage depends on your unique income, lifestyle, employment situation, and financial goals.
A financial advisor at Barnum Financial can help you evaluate your current coverage, identify gaps, and select a disability insurance solution that protects what matters most: your ability to earn an income.
