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Best disability insurance for startup employees (2024)

Startup founders and employees need disability insurance to protect their incomes in case they can’t work.

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Andrew HurstSenior Editor & Licensed Auto Insurance ExpertAndrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

Edited by

Anna SwartzAnna SwartzSenior Managing Editor & Auto Insurance ExpertAnna Swartz is a senior managing editor and auto insurance expert at Policygenius, where she oversees our car insurance coverage. Previously, she was a senior staff writer at, as well as an associate writer at The Dodo.

Updated|4 min read

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It’s worth having disability insurance if you’re a startup founder or work at a startup and have a high-paying or specialized job. Disability insurance is a form of financial protection that replaces your income when you can’t work because of an injury or an illness, so it can be especially important for people in the tech industry.

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If you’re a startup founder, you can also get a special kind of disability insurance that pays some of your startup’s expenses, like your employees’ wages, rent, maintenance, and taxes, if you can’t work temporarily.

Why disability insurance is a good idea for startup workers

As a startup employee, disability insurance can be crucial financial protection in case the worst happens. It covers your expenses while you’re out of work because of an illness or injury, which is especially valuable if you have a high-paying job as a software engineer, project manager, operations manager, or even a founder.

Disability insurance is also a way to protect your investment in your education, whether you have a computer science degree or completed a coding bootcamp. If you’re suddenly out of work, whether it’s for months or years, disability insurance keeps up your income. You can also use it to pay off school or bootcamp debt.

And if you’re a founder, having disability insurance can be important so you don’t have to rely on your savings, which might have gone to your business already anyway, to keep up with your expenses when you can’t work.

What kind of disability insurance should startup employees get?

Long-term disability insurance, which can pay out for anywhere from a year to decades, even all the way through retirement age, is the best choice for an individual policy.

You’ll also get the most protection from an own-occupation disability policy. Own-occupation means you can collect benefits if you can’t do your specific job, even if you can find work in another job in the same industry.

If I’m a founder, do I need disability insurance for my employees?

If you run a startup, you actually might be required to provide group disability insurance for your employees. Businesses in California, Hawaii, New Jersey, New York, and Rhode Island have to offer disability insurance.

Your state may also limit the amount you can ask your employees to contribute toward the cost of your company’s group disability insurance.

What about business overhead expense insurance for startups?

You might also want to get business overhead expense insurance if you run a startup. This is a special type of disability insurance that covers your business expenses, like rent, debts, insurance premiums, employee wages, and more — but not your own income.

Business overhead expense insurance can be right for you if you play a critical part in running your startup and your temporary absence could cause your company to go under.

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Should startup employees get short-term disability insurance?

Consider getting short-term disability insurance as a startup employee, especially if your employer offers it for free or at a discounted rate. But while it’s good to have the extra protection of employer-sponsored group disability insurance, you shouldn’t rely on a short-term policy by itself.

If you get short-term disability insurance through work, you might want to consider a supplemental disability insurance policy. This lets you add more protection while avoiding the cost of an individual long-term disability insurance policy. 

Disability insurance riders for startup employees

There are a handful of disability insurance riders, or extra coverage options, that are worth having for certain startup employees and founders.

  • Cost of living adjustment (COLA): Increases your monthly benefit to keep up with inflation.

  • Future increase rider: If your income increases, add more coverage without having to go through another medical exam.

  • Non-cancelable/guaranteed premiums: Keeps your policy active at the same rate as long as you make your payments on time.

  • Partial disability benefit: Pays out benefits if you lose part of your income, not just your entire income, because of an injury or illness.

  • Retirement protection: Replaces the retirement contributions you made while you were working.

  • Student loan rider: Continues making payments towards your student loans while you’re disabled and can’t work.

How much does disability insurance cost for startup employees?

How much you’ll pay for disability insurance depends on your age, health and medical history, hobbies, income, and other personal factors. But income is a big factor — the more you make, the more expensive your disability insurance will be.

Most of the time you can expect your disability insurance to cost between 1% and 3% of your income, but that can change depending on your risk factors.

Best disability insurance companies for startup employees

The best companies offer useful riders and have experience working with high-net worth workers and entrepreneurs.

Some top disability insurance companies include:

What we like …


AM Best


Includes a survivor benefit for your beneficiary.




Includes a vocational training benefit.




Offers lifetime continuous benefits for total disabilities, even after the policy expires.




Offers a lump-sum payment of $62,400 in addition to regular benefits if you're presumptively disabled.



The Standard

Includes a family care benefit if you have to take care of a sick loved one.



Shopping for disability insurance can be confusing, so if you’re not sure where to start, Policygenius can help you get quotes and find coverage.

How to get disability insurance if you work at a startup

You can find the right disability insurance policy for you by following these steps:

  1. Calculate how much coverage you need Choose your monthly benefit amount, how long your benefits should last, and the waiting time before your benefits can start, (your elimination period).

  2. Consider riders Riders are extra coverage options, so only add the ones that you think are useful.

  3. Compare disability insurance quotes Get quotes for long-term disability insurance from multiple companies to find the best one for your needs.

  4. Fill out a formal application Share more information about your work, income, habits and health.

  5. Complete a phone interview Answer questions about your medical history and any risky hobbies or habits, like smoking.

  6. Go through underwriting Complete a medical exam, verify your income, and get a statement from your doctor (APS) about your health.

  7. Sign your policy and get covered When you get your policy in the mail (the underwriting process can take four to six weeks), sign it and send it back to start your coverage.

If you’re a startup founder or entrepreneur, you also need to decide if you want to apply for business overhead expense insurance. If you do, the process is similar to getting personal disability insurance — the main difference is that your insurance company will ask to verify your company’s financials.

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Frequently asked questions

How much disability insurance do startup employees need?

You should have enough disability insurance to cover what you make as a startup employee. If your salary is low now but you have the chance to set a higher limit based on your work history, consider it, but don’t spend more than you can afford.

Do you need disability insurance if you already have coverage through work?

You should consider getting an individual disability insurance policy even if you get group disability insurance through work. Group disability benefits are not as strong as an individual policy and your work has control over your benefits, waiting period, and other policy features.

What elimination period is best for startup employees?

It depends on how long you can live on your savings and how much you can afford. A longer elimination period (at least 90 days) means cheaper premiums, but it wouldn’t make sense if you can’t cover your expenses with your savings for more than a few weeks.


Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.


Anna Swartz is a senior managing editor and auto insurance expert at Policygenius, where she oversees our car insurance coverage. Previously, she was a senior staff writer at, as well as an associate writer at The Dodo.

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