Is long-term disability insurance worth it?

Long-term disability insurance, which protects your income if you’re sick or injured and can’t work, is definitely worth it for people with high-paying jobs or specialized careers.

According to the Social Security Administration, more than one in four 20-year-olds will become disabled before they reach retirement age, so it’s worth considering long-term disability insurance to avoid facing long periods without any income. [1]

Do I need long-term disability insurance?

You need disability insurance if you have a high-income job, dependants who rely on your income, or if you’ve invested years of education into your career. 

Doctors, lawyers, dentists, and other professionals should all consider long-term disability insurance, in part because their incomes may be impossible to replace with another job if they’re hurt or injured and can’t continue working in their field.

Disability insurance may also be worth it for people with risky or very physical jobs who want to protect their income in case they become disabled. Disability insurance may not be as affordable for people with high-risk careers, but it might be worth the financial protection and peace of mind.

Pros and cons of long-term disability insurance

Is long-term disability worth it for everyone?

While long-term disability insurance is a good way for many people to protect their incomes, not everyone needs it.

Long-term disability insurance isn’t right for people who can’t afford to keep up with their disability insurance payments. If you stop paying for disability insurance, your coverage will lapse and you wouldn’t receive disability benefits even if you were hurt or ill.

You also probably don’t need disability insurance if you’re not worried about losing your income in the event of an illness or injury that keeps you from working. If you could live normally without the income from your job, you don’t need disability insurance.

Is short-term disability insurance worth it?

Short-term disability insurance, which many people get through their jobs, is worth having, but you shouldn’t rely only on it alone.

Unlike long-term disability insurance, short-term disability insurance only provides benefits for a few months. These benefits will also be taxed if you bought your short-term policy with pre-tax dollars (which might be the case if you got it through an employer).

Should I get disability insurance if I’m self-employed?

It’s still worth getting disability insurance if you’re self-employed. If you become disabled and can’t work, your disability insurance will still give you the same financial protection as someone who works for an employer.

Getting disability insurance that covers your business overhead expenses may be worth it if you own your own business. Business overhead expense coverage would take care of your business’s loans and contracts, rent, utilities, payroll, and more.

That said, you’ll have to prove to disability insurance companies that you’ve been earning income as a self-employed person for at least two years in order to get coverage.

Is disability insurance worth it with Social Security?

It’s worth having your own disability insurance even if you already qualify for disability benefits from Social Security. Your insurance company might even require you to apply for Social Security benefits when you buy a policy.

Disability insurance is worth it for someone with Social Security benefits because you’ll get larger benefits from a private policy. Your long-term disability insurance can pay out about 60% of your current income if you couldn’t work, but Social Security typically pays out less than $1,500 a month.

→ Read more about how Social Security and private disability insurance stack up

Is individual disability insurance worth it if you have group coverage?

If you have group disability insurance through an employer or another type of organization, it’s still worth getting an individual long-term disability policy.

Although group disability insurance is much cheaper and easier to qualify for than personal coverage, coverage can be limited and your benefits could be taxed. Plus, if you get disability insurance through work, you’ll lose the policy and your coverage if you leave your job.

Where to get disability insurance

Lots of insurance companies offer long-term disability insurance. You can usually get disability insurance from an insurance company that also sells auto or home insurance (like State Farm or Allstate), or from a company that specializes in disability coverage (like Guardian or Assurity).

Getting a disability insurance policy is pretty straightforward. You can work with a licensed agent to fill out an application and compare disability quotes, then go through a medical exam, prove your income, and get a sign-off from a doctor that you’re in good health in order to finalize your policy.

→ Read more about how to get disability insurance

Frequently asked questions

What is covered under long-term disability insurance?

Long-term disability insurance replaces your regular income and allows you to keep up with your expenses if you can’t work due to a serious injury or illness, like a back injury from a car accident, complications from pregnancy or childbirth, loss of vision, or fatigue from a viral infection.

How long does LTD insurance last?

Insurance companies usually allow you to choose whether your LTD insurance will last two, five, or 10 years, or until you reach retirement age (65 or 67).

Is supplemental disability insurance worth it?

Supplemental disability insurance is most worth it to people who want to add protection to a plan they got through their employer, or to people whose long-term policies would no longer fully cover their income.

How much does long-term disability insurance cost?

While the cost of long-term disability insurance depends on factors that are different for everyone, like age, location, and job, it’s a safe estimate that disability insurance will cost between 1% and 3% of your annual incomes.