Buying life insurance and disability insurance at the same time

The best way to protect your income is by having both a life insurance and disability insurance policy in place.

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By

Nupur Gambhir

Nupur Gambhir

Senior Editor & Licensed Life Insurance Expert

Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

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While life insurance protects your family from financial loss after you’ve passed away, disability insurance ensures that you and your family are financially protected while you are still alive. A disability insurance policy provides an income replacement if you can no longer work due to a disability. Along with life insurance, it is an essential part of your financial protection plan.

If you don’t already have long-term disability insurance, applying for a policy when you’re shopping for life insurance makes the process a lot easier. Both applications take about the same amount of time — disability insurance takes four-to-six weeks, and life insurance takes five-to-six weeks. You can use the same medical exam for each application process.

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How life insurance and disability insurance work

Life insurance and long-term disability insurance are both sources of income protection, though they differ in when and how they offer coverage. The graph below demonstrates the key components of life and disability insurance.

Criteria

Term life insurance

Long-term disability insurance

Primary purpose

Provides financial protection for your dependents if you die

Provides income protection for you if you become disabled

Benefit period

Lump sum if you die while your policy is active

2, 5, 10 years, or until retirement

Coverage amount

$100,000 to $1 million+

Up to 60% gross monthly income

Average cost

$20-$40 per month for healthy individuals

1-3% of annual salary

What does life insurance cover?

Life insurance provides an income replacement to your beneficiaries if you die. It is an essential form of financial protection for anyone with dependents so that they don’t financially struggle due to the loss of a breadwinner. 

The life insurance death benefit can pay for medical bills, funeral costs, mortgage payments, college tuition, student loans, and even vacations. Because life insurance benefits are typically tax-free, your family and dependents can do anything with the money.

What does disability insurance cover?

Like life insurance, long-term disability insurance is a form of income replacement. But unlike life insurance, long-term disability insurance protects your income while you’re alive. If an accident or illness prevents you from working, the long-term disability benefits pay out about 1-3% of your salary for a length specified in your policy.

The chances of becoming disabled at some point in your career are likely — one in four people experience a disability at some point while they are employed. [1] Cancer, back and muscle pain, depression, and anxiety are all examples of conditions that may prevent someone from working.

The graph below shows the likelihood of getting a disability at each age. You’ll notice that as you get older, the likelihood that you become disabled for a longer period of time increases.

Current age

Likelihood of a long-term disability before retirement

Average duration of a long-term disability

20-30

2.5 in 10

26 months

31-40

3.3 in 10

32 months

41-50

3 in 10

42 months

51-60

2.3 in 10

50 months

60+

1 in 10

54 months

Why you should apply for life and disability insurance at the same time

Applying for long-term disability insurance is a very similar process to applying for life insurance. Applying for both at the same time ensures that you’re not lacking any necessary financial protection, and means you don’t need to spend months going through the same process twice. 

Both insurance policies require the following steps in the underwriting process to receive coverage:

  • A brief phone interview to figure out how much coverage you need and are eligible for.

  • A medical exam to assess your health and determine how much you pay.

  • An attending physician’s statement, or an APS, to collect any information about any remaining medical questions, if applicable.

Additionally, the disability insurance underwriting process usually asks about your income and occupation. You may be asked to provide documents to show your income to get a policy that reflects your financial needs.

Disability insurance rates and life insurance rates vary for each insurer because each insurance company’s underwriting rules are slightly different. One insurer may charge more for high blood pressure while another might care more about your family history. Working with an independent broker like Policygenius makes the process easier because an agent can review both applications and find the best rates for your disability insurance and life insurance coverage.

How to apply for life and disability insurance at the same time

There are a few reasons why applying for life and disability insurance at the same time makes sense.

  1. Secure low rates: Both the cost of buying life and disability increase as you age, which makes it important to apply sooner rather than later. There can be some exceptions to this rule, such as if you’re in the later stages of pregnancy or you have recently lost weight.

  2. Two applications but one timeline: Both applications take about the same amount of time, so you save a lot of time if you go through the timeline all at once. There are two separate applications, but you can use the same medical exam and labs. The lab results from the medical exam are usually good for six months to a year, depending on your age and insurance company.

  3. Make sure you’re covered: If for some reason you can’t afford the disability insurance premiums offered, you can add disability riders to your life insurance policy. But, you can only do this while applying for life insurance. Going through both applications at the same time ensures you are on the right timeline to get the most robust coverage.

How to add disability coverage to your life insurance policy

Long-term disability policies offer the most robust income protection if you become disabled and can’t work, but if you can’t afford to pay for two separate insurance policies, you can add a disability rider to your life insurance policy.  

These riders require additional underwriting and will usually increase how much you pay for life insurance, but they’re the next best thing if you can’t afford a stand-alone disability insurance policy.

Here are a few different disability riders you can add to a life insurance policy:

  • Disability income rider: A disability income rider pays out some of the death benefit if you become disabled and cannot work, but it doesn’t pay out nearly as much as a standalone disability would.

  • Waiver of premium rider: With a waiver of premium rider, you no longer need to pay your life insurance premium payments if you become disabled and can no longer earn an income.

  • Accelerated death benefit rider: If you’re diagnosed with a terminal illness, you can use the accelerated death benefit rider to tap into your policy to cover any of your expenses.

  • Critical illness rider: Similarly to the accelerated death benefit rider, the critical illness rider pays out money from the death benefit if you become terminally ill or have a serious medical complication. 

→ Learn more about the disability riders you can add to your life insurance policy

Life and disability insurance offer crucial financial protection. Applying for both at the same time makes the application process seamless and efficient. Work with a Policygenius agent for free to streamline the application process and get both policies at the most affordable price. 

Frequently asked questions

Is disability included in life insurance?

Disability coverage is not automatically included in life insurance policies, but you can get disability riders added to your policy at an extra cost. You will need to purchase any disability riders you want during the application process.

Are life insurance and disability insurance the same?

While life and disability insurance both offer income replacement, they are not the same. Life insurance protects the financial health of your beneficiaries after you die, whereas disability insurance pays out to you while you are alive and if you become too disabled to work.

Can I get life insurance while on disability?

Yes. But, depending on your medical condition, you may have to pay higher rates.

References

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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of our

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  1. Centers for Disease Control and Prevention (CDC)

    . "

    CDC: 1 in 4 US adults live with a disability

    ." Accessed January 27, 2022.

Author

Senior Editor & Licensed Life Insurance Expert

Nupur Gambhir

Senior Editor & Licensed Life Insurance Expert

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Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

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