Most working people need both disability and life insurance. Life insurance pays out a lump sum of money when you die to protect your family from financial loss. Disability insurance pays you money while you’re still living to replace your income if you’re unable to work because of a disability. If you’re working, you need to have both disability and life insurance to ensure that you and your family have the protection you need.
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 four to six weeks to process. You can also use the same medical exam for each application. Applying for both products at the same time can make getting coverage faster and simpler for you.
How life insurance & disability insurance work
Life insurance and long-term disability insurance are both designed to protect you financially. However, each product differs in when and how you can use it. The chart 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 and unable to work |
Benefit period | Lump sum if you die while your policy is active | 2, 5, 10 years, or until retirement |
Coverage amount | $100,000 to $3 million+ | Up to 60% gross monthly income |
Average cost | $20-$60 per month for healthy individuals | 1-3% of annual salary |
What does life insurance cover?
Life insurance is meant to help your loved ones recover from any financial loss that will occur when you die. Term life insurance also serves as an income replacement to your beneficiaries. Term life insurance is helpful to have if anyone depends on your income.
The funds your loved ones receive from a life insurance payout are typically tax-free, and your family and dependents can use the money at their discretion. They may use the death benefit to pay for medical bills, funeral costs, mortgage payments, college tuition, student loans, or even vacations.
Learn more: What to do with a life insurance payout
What does disability insurance cover?
Disability insurance protects you if you’re unable to work. While life insurance protects your beneficiaries when you die, long-term disability insurance is meant to be used while you're still alive.
If an accident or illness stops you from working, the long-term disability benefits pay out about 60% of your salary for a length of time specified in your policy.
The chances of becoming disabled at some point in your career are likely. In fact, 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 could prevent someone from working.
The chart 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 |
How to apply for life & disability insurance at the same time
Applying for long-term disability insurance is similar to applying for life insurance. Applying for both at the same time can help you get the necessary financial protection in place efficiently. You won’t need to spend months going through the same application process twice.
Both types of insurance require the following application steps:
A quick phone interview to figure out how much coverage you need and are eligible for
A medical exam to assess your health and help determine how much you pay
An attending physician’s statement, or an APS, to collect any information about any remaining medical questions, if applicable
For disability insurance, you’ll have to verify your employment details. To get a policy that reflects your financial needs, you may be asked to provide documents to show your income.
Disability insurance rates and life insurance rates vary for each insurer because each company evaluates risk differently. 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 for you. An agent can review both applications and find the best rates for your disability insurance and life insurance coverage.
Learn more about how to apply for insurance
Should you apply for life & disability insurance at the same time?
There are a few reasons why applying for life and disability insurance simultaneously makes sense.
Secure low rates: Both the cost of buying life and disability insurance increase as you age, so applying as soon as possible can save you money. While there can be some exceptions to this rule — if, for example, you’re in the later stages of pregnancy or you have recently lost weight — in general, the sooner you get insurance, the less it will cost you.
Two applications, one timeline: Both applications take about the same amount of time, so you can get covered more quickly if you apply for both 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 only good for six months to a year, depending on your age and insurance company.
Make sure you’re covered: If you can’t afford the disability insurance premiums you’re offered, you’ll also have the option to add disability riders to your life insurance policy instead. You can only take advantage of this option when you’re applying for life insurance. Going through both applications at the same time ensures you’re on the right timeline to compare all of your options and get the most robust coverage.
How to add disability coverage to your life insurance policy
Long-term disability policies offer the most comprehensive 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 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 early if you become disabled and can’t work, but it doesn’t pay out nearly as much as a standalone disability policy would.
Waiver of premium rider: With a waiver of premium rider, you won’t 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 while you’re still living. Many people use this feature to pay medical 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.
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 isn’t automatically included in life insurance policies. It’s common for individuals to buy both a disability and a separate life insurance policy. Sometimes, you’ll also have the option to add a disability rider to a life insurance policy.
Are life insurance and disability insurance the same?
Life and disability insurance are not the same. Life insurance pays a lump-sum amount of money to your loved ones after you die. Disability insurance pays you money while you’re alive if you become disabled and unable to work.
Can you get life insurance while on disability?
Having a disability won’t stop you from getting life insurance. Depending on the details of your disability, combined with your overall health and lifestyle, you may have to pay a higher rate for your life insurance.
