Do You Need Disability Insurance? Three Things to Know
Disability insurance can help replace some of your income during unexpected life events. Here are the basics, courtesy of a financial professional.


When it comes to comprehensive wealth planning, it's crucial to consider all aspects of financial security.
Discussions around insurance often prioritize life insurance and less frequently focus on disability insurance, but in general, Americans are about 3.5 times more likely to become disabled than to die in any particular year.
In the event that you become disabled and are unable to work, disability insurance can help safeguard your financial stability and function as a cornerstone of a holistic plan.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you don’t already have coverage, you may want to discuss your options with your financial adviser or your insurance agent.
The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.
If you’re considering disability insurance, here are a few things to keep in mind:
1. Short-term vs long-term disability
Short-term and long-term disability insurance both provide coverage for disabilities that are not job-related, but they differ in duration and terms.
Short-term disability insurance is typically available only through your employer. It provides benefits for a limited period, usually up to a year, if you are unable to work due to an illness, accident or even pregnancy.
Short-term disability benefits generally begin after an “elimination period,” which is often 30 days.
In contrast, long-term disability benefits kick in after a longer elimination period, usually between 90 and 180 days. It can continue to provide benefits until the age of 65 or you are no longer disabled.
Short-term disability generally covers you during your long-term disability elimination period.
2. Private disability policy
Employer-provided disability insurance can offer good coverage, but you may be wondering if you need a private disability policy.
Two reasons to consider a private policy are the taxability of the benefit and portability of coverage. You should also consider whether your employer-provided coverage would replace enough of your income should you become disabled.
If you pay the premium for your employer-provided disability policy with pre-tax dollars, which is the case at many companies, then any benefit you receive under that policy would be subject to income tax.
But if you pay your premium with after-tax dollars, either for your employer’s coverage or a private policy, your benefit would be tax-free.
It’s important to factor in how taxes may impact your benefit to determine whether you need to adjust your employer’s coverage or supplement it with private coverage.
Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.
You should also consider the portability of coverage. Employer disability policies are generally not transferable if you leave your job.
If you want to be sure that you have disability insurance regardless of where you work — or even if you decide to start your own business — you would need a private policy to be covered.
3. 'Own occupation' coverage
A key advantage with a private policy is that you can tailor your benefits to your needs. One common feature is including coverage if you are disabled and unable to perform the regular duties of your “own occupation,” or the job you held when you bought the policy. Different insurers have different names for this benefit.
In many long-term disability policies, you may not be deemed to be disabled if you are able to do any work at all.
But if you are insured through a private policy for your “own occupation,” you can receive benefits even if you are able to work in an alternative occupation than the one you held when you purchased the policy.
Disability insurance is often overlooked, but it can be an important component of wealth planning and peace of mind.
You should take into account your personal situation and consider speaking with a financial adviser or your insurance agent to figure out which policies make sense for you.
JPMorgan Chase & Co., its affiliates, and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.
J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC.
Related Content
- How You Get the Right Insurance Coverage at the Right Price
- Buying an Insurance Policy: Three Ways to Do It
- Choosing a Trustee? These Six Tips Can Help You Pick Wisely
- Who Will Be the Beneficiaries of Your Wealth?
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Adam leads J.P. Morgan Wealth Management's Wealth Planning and Advice team, which is responsible for wealth planning, thought leadership and strategic planning for individual clients. This national team of former practicing lawyers provides experience in estate and tax planning strategies, retirement planning, restricted and control stock and stock option management, business succession planning, pre- and post-transactional planning, concentrated position management and other personal planning strategies. The team provides internal training to the J.P. Morgan Wealth Management sales force on these topics and also creates content for distribution to the public.
-
The Most Tax-Friendly State for Retirement in 2025: Here It Is
Retirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Plan for Higher Health Care Costs in 2026: Projected Medicare Part B and Part D Premiums
In 2026, Medicare participants will pay more for their health care. Part B costs are expected to rise more than 10%. Here's what you can do.
-
Plan for Higher Health Care Costs in 2026: Projected Medicare Part B and Part D Premiums
In 2026, Medicare participants will pay more for their health care. Part B costs are expected to rise more than 10%. Here's what you can do.
-
The Weak Dollar is Making a European Vacation Harder to Afford in Retirement
Travel pros explain how you can afford a European vacation in retirement, despite a weak dollar.
-
Avoid Medicare's 'Shadow Tax' With This Financial Expert's IRMAA-Busting Tips
You're cruising along in retirement, and then bam: Your Medicare premiums soar because your income crossed the limit. Take a breath. There could be a solution.
-
Grilling Season and ETFs: There's More Than One Way to Cook Up a Portfolio
Exchange-traded funds come in a multitude of 'flavors' these days, from passive to active to factor-based. Their flexibility is what makes them so delicious.
-
You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term Care
Planning for long-term care is crucial to protect your independence, family and financial stability against unexpected health events and rising care costs not covered by standard insurance.
-
Japan Tariffs: 5 Things That Might Get More Expensive for You
President Donald Trump's trade agreement with Japan features a 15% reciprocal tariff for all imported products, which could impact the prices of these items when you go shopping.
-
My First $1 Million: Retired Accounting Firm Partner, 62, Greater Boston Area
Ever wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
Five Questions to Help Ensure a Happy, Secure Retirement
You need to drill down to what you really want out of retirement. Then you can get down to the business of crafting a financial plan to make it happen.