Unexpected events can have a lasting impact on your finances. Lost income, treatment costs, and recovery time can add up — with many expenses falling outside standard medical insurance or government disability payments. Fortunately, there are additional forms of coverage that can help protect you and your family from the uncertain. Here’s what you should consider when figuring out the type of coverage you might need:

  1. Determine the real cost of protecting your income
    Income is a critical component of your standard of living. Add up mortgage payments, student loans, credit card debt, and other costs of living, as well as saving for college and retirement, and chances are you use most of your paycheck each month. Disability income insurance can offer protection for lost wages if you get too sick or injured to work. Most disability income insurance won’t cover all  lost income, but it can provide enough to cover a large portion of your expenses. In general, individual disability income insurance costs between two and three percent of your salary. For example, if you earn $100,000, you’ll spend around $2,000 to $3,000 a year for coverage.
  2. Understand the difference between short-term and long-term disability
    There are short-term disabilities and long-term disabilities, and benefit plans can vary widely when it comes to the terms. Knowing what coverage you have is important in order to maintain protection and avoid gaps in income.

    Short-term disability is generally defined by employers as falling within 70-180 days, and is often employer-paid. Long-term disability will kick in after that short-term coverage has expired. Long-term disability coverage might extend for years or even until you’re 65, depending upon the employer’s offering. 

    An employer’s plan might make you apply for US government disability benefits before you receive any income that their own insurance plan would provide, which could leave you with an income gap. When you’re not sure, talk to your human resources contact at work, or speak to a qualified insurance professional.
  3. See if government protection is enough for you
    US government disability is essentially public insurance, meant for individuals who suffer disabilities that prevent them from working for at least one year. If you qualify for Social Security, you will likely qualify for disability payments, depending on the degree of proven incapacity. The income provided through US government disability protection currently averages about $14,000 a year1 and receiving the benefits could take months, so be sure you can live on this amount of money if you choose to rely on this option alone.
  4. Evaluate the coverage you already have
    Become familiar early on with the details of your existing insurance coverage, start with those offered through your job and evaluate if it’s enough. Around 40 percent of US employees currently have access to short-term disability insurance through work and 34 percent have access to long-term benefits.2  Disability income insurance has to be obtained prior to the accident or illness, so it’s important to be aware of what protection you currently have and to understand the terms. If you’re self-employed, you may be able to obtain plans through any memberships in professional organizations. 
  5. Consider strengthening your protection with supplemental insurance
    Disability income insurance provided by your employer will give you base coverage for lost income. Generally, depending on your circumstances you could be reimbursed around 40 to 60 percent of your pre-disability salary. Basic disability income insurance often has caps and will not compensate for bonuses, commissions, or profit sharing. A supplemental disability income insurance plan, either obtained through work or independently, can cover a portion of income that basic insurance may not.
  6. Talk to your financial representative about a “waiver of premium” rider
    Some life insurance policies allow you to purchase a waiver of premium rider, which protects your policy in the event that an unexpected disability makes it hard for you to pay your monthly premiums. Without it, if you couldn’t afford to pay your premiums, your coverage could be cancelled. Check with your financial representative for the specific guidelines of your policy; there may be certain requirements in terms of age and how a disability is defined.3
  7. Look into accident, cancer, and critical illness insurance
    Supplemental care policies can provide coverage for expenses that aren’t included in your health plan, at a relatively modest cost. These policies may be offered through your work, outside professional organizations, or from private insurance companies. The terms differ from conventional medical insurance in that payments are often made directly to you instead of to the medical providers. Deductibles, co-pays, extra tests, transportation to hospitals, and even cost of living expenses such as childcare, rent, and food are covered, and you may be able to use the payments as you want. Additionally, some individual disability income insurance policies offer serious illness coverage.
  8. Check your coverage options before leaving a job
    Most employer-offered insurance requires you to be an active employee while some insurance plans may allow you full portability. If you’re considering filing a claim, make sure you’re clear about the terms of your insurance at work and any optional or supplemental insurance plans. It’s extremely important to know your options when it comes to extending coverage, particularly if you have filed a claim or aren’t sure when you’ll be in a full-time role again.
  9. If it’s your own company, it needs protecting
    Even if you own your own business, you’ll still need protection from accidents or health problems. While your personal medical costs are covered by health plans and insurance, it’s likely your business would suffer if you had an accident or became ill for several months. Consider looking into disability income insurance for small businesses, which is offered specifically to protect businesses. This would enable you to help meet payroll and cover your firm’s overhead until you’re well enough to be back at the helm and it also helps prevent your personal income from dropping.

Having the protection that’s right for you helps prepare you for life’s challenges

Disability, accident, cancer, critical illness, or business insurance policies have all been designed with one goal: to prepare you and your loved ones for potential health difficulties and the financial consequences that can come from the unexpected. Many of the costs and lost income these policies cover will not be picked up by standard health plans or by basic disability. Speak to a financial representative who understands disability and life insurance to learn more and to help you take steps today to help protect your future.

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The Faces and Facts of Disability,” Social Security Administration, 2019


Employee Access to Disability Insurance Plans,” Employee Bureau of Labor Statistics, October 26, 2019


A Waiver of Premium rider waives the obligation for the policyholder to pay further premiums should he or she become totally disabled continuously for at least six months. This rider will incur an additional cost. See policy contract for additional details and requirements.

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA or provided by Guardian. BLICOA is a wholly owned stock subsidiary of and administrator for The Guardian Life Insurance Company of America (Guardian), New York, NY. Product provisions and availability may vary by state. Optional riders are available for an additional premium. An individual’s eligibility for benefits is determined on a case-by- case basis, taking into consideration the factual circumstances presented as well as the terms and conditions of his/her policy(ies).

2021-130610  20240131