10 Myths About Disability Income Insurance Debunked
Disability Income Insurance is one of the most overlooked financial tools available, despite the fact that more than 1 in 4 workers will experience a disability before retirement age. While most people insure their homes, cars, and even phones, they often neglect to protect what actually pays for all of those things: their income.
Why the disconnect? Misconceptions and lack of information are to blame. Below, we bust 10 of the most common myths about disability income insurance. Hopefully, you will be able to make an informed decision and protect your financial future after reading this blog.
1. “I’m healthy. I don’t need disability insurance.”
Truth: Disabilities often result from illness, not accidents. Cancer, heart disease, and mental health issues are among the leading causes of long-term disability. Even the healthiest individuals can face unexpected health setbacks that interrupt the ability to earn an income.
2. “Workers’ compensation will cover me.”
Truth: Workers’ compensation only covers work-related injuries or illnesses, and those account for less than 5% of disabling events. If you get injured skiing, develop a chronic illness, or need mental health treatment, you’re likely on your own unless you have private disability coverage.
3. “Social Security Disability Insurance (SSDI) is enough.”
Truth: SSDI is notoriously difficult to qualify for and pays an average of just over $1,500 per month; far from enough to cover the cost of living for most people. Approval can take months or even years, and many first-time applicants are denied.
4. “My emergency fund will cover me.”
Truth: A typical emergency fund might cover 3–6 months of expenses. But what if you're disabled for a year or longer? Long-term disability coverage can provide income for years even up to retirement ensuring your emergency fund doesn't get drained in the first few months.
5. “It’s too expensive.”
Truth: Many people overestimate the cost of coverage. Disability income insurance typically costs just 1–3% of your annual salary. That’s a small price to pay to protect up to 70% of your future earnings. With customizable options, you can tailor a plan to your budget.
6. “My employer provides enough coverage.”
Truth: Employer provided plans often cover only 40-60% of your salary and the income is taxable if the employer pays the premium. That means your take home pay could be even lower. Plus, you may lose coverage if you change jobs. In contrast, an individually purchased disability insurance plan can provide up to 70% of your earnings as tax-free income.
7. “I’m covered by life insurance.”
Truth: Life insurance helps your loved ones if you die. Disability insurance helps you if you’re alive, but unable to earn. Both are important but they serve very different purposes.
8. “Disability insurance only covers catastrophic events.”
Truth: Policies can cover partial disabilities, allowing you to receive benefits if you can’t work full-time or in your specific occupation. Many disabilities don’t cause total incapacitation. They simply reduce your capacity to earn at your previous level.
9. “Only physical laborers need disability insurance.”
Truth: White-collar workers often assume they’re immune to disability, but desk jobs don’t protect against cancer, back problems, car accidents, mental health conditions or other income disrupting events. In fact, the more you earn, the more you have to lose.
10. “It’s too complicated to figure out how much I need.”
Truth: It doesn’t have to be complicated. With the right tool, you can quickly estimate your income needs and identify the gap that disability insurance can fill. That’s where our Disability Income Insurance Calculator comes in.
Don’t Let Myths Cost You Your Livelihood
Disability can strike when you least expect it. Without proper coverage, your financial stability can disappear overnight. Whether you're single or supporting a family, your income is your greatest asset. Don't let myths stand between you and the peace of mind you deserve.
👉 Take the guesswork out of disability income insurance. Use our Disability Income Insurance Calculator to instantly see how much coverage you need based on your current income and expenses. Making an informed decision to protect your paycheck has never been easier.
Final Thoughts
No one plans to become disabled, but smart planning means preparing for the unexpected. Don’t let common myths stop you from protecting your most valuable financial security. Whether you’re in your 20s, 40s, or beyond, the best time to consider disability income insurance is before you need it.
Your future self will thank you !