Who Needs Disability Insurance?

If you rely on the income from your job to sustain your lifestyle, you could benefit from disability insurance. About one in four people will become disabled during their working years, and most cannot withstand the financial hardship of losing income for an extended period of time if they get sick or injured.

Headshot of Jennifer Schell, writer for Annuity.org
  • Written By Jennifer Schell, CAS®
    Jennifer Schell, CAS®

    Jennifer Schell, CAS®

    Financial Writer, Certified Annuity Specialist®

    Jennifer Schell is a professional writer focused on demystifying annuities and other financial topics including banking, financial advising and insurance. She is proud to be a member of the National Association for Fixed Annuities (NAFA) as well as the National Association of Insurance and Financial Advisors (NAIFA).

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  • Edited By Savannah Pittle
    Savannah Pittle
    Headshot of Savannah Pittle, senior editor for Annuity.org

    Savannah Pittle

    Senior Financial Editor

    Savannah Pittle is an accomplished writer, editor and content marketer. She joined Annuity.org as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

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  • Reviewed By Daniel J. Adams, MBA, CFP®, CLU®
    Daniel J. Adams, MBA, CFP®, CLU®
    Daniel J Adams, Annuity.org reviewer

    Daniel J. Adams, MBA, CFP®, CLU®

    Founder and President of CEG Life Insurance Services

    As the founder of CEG Life Insurance Services, Daniel J. Adams has extensive experience with life and health insurance products. Daniel assists clients in building a secure financial future as a Certified Financial Planner™ professional and independent insurance agent. He also trains new agents and advises other financial professionals.

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  • Updated: November 10, 2023
  • 6 min read time
  • This page features 6 Cited Research Articles

Key Takeaways

  • Nearly every worker could benefit from disability insurance coverage, as a serious illness or injury can affect anyone.
  • Parents and sole providers of the household, as well as business owners with employees, might consider disability insurance to protect their livelihood and those who depend on them.
  • Workers in physically demanding occupations or jobs with a greater risk of injury are especially vulnerable to losing work, so it might be beneficial to consider disability insurance.

Types of People Who May Need Disability Insurance

Anyone who relies on the income from their job can benefit from disability insurance, but there are certain types of people who might especially consider purchasing a policy to protect their income in case they become disabled and can no longer work.

Sole Providers or Parents

If you’re the sole provider or “breadwinner” of your household, disability insurance protects more than just your income. When loved ones rely on you, you don’t want to worry about how they’ll get by if you can no longer work. Disability insurance coverage ensures that if something happens to you, you’ll be able to provide for those who depend on you.

On a similar note, many parents consider disability insurance to protect their families’ wellbeing. Daniel Adams, president of CEG Life Insurance Services, recommended that parents, especially those with young children, obtain disability insurance. “Even those who support a family in non-financial ways, such as a stay-at-home parent, should consider disability insurance,” Adams said, “as the loss of their ability to perform their responsibilities could necessitate financial support.”

People With Recurring Injuries

You might also want to consider purchasing disability insurance if you deal with a chronic or recurring injury, such as back pain or a hip injury. While these conditions might be manageable for you now, you can never tell how a chronic injury will impact your ability to work in the future.

Months or even years down the line, a recurring injury can worsen or require medical treatment or surgery. If this happens, you might be unable to work for anywhere from a few weeks to many years. Disability insurance offers income protection if your injury prevents you from working.

It’s worth noting that pre-existing conditions such as chronic injuries can have an exclusion added to their policy, which would prevent them from collecting a benefit if disability was related to that pre-existing condition. In these cases, group disability insurance through an employer (which may not exclude pre-existing conditions) could be the best option – assuming it is available.

Workers in Physically Demanding Jobs

If you work in a physically demanding job or a job with an increased risk of injury, you should probably consider protecting your livelihood with disability insurance. Jobs requiring extensive physical activity, as opposed to more sedentary desk jobs, will be harder to keep if you become sick or injured.

Many jobs that require manual labor carry a greater risk of being injured on the job. These professions include construction, manufacturing and agricultural work. You may be entitled to workers’ compensation if you’re injured on the job, but the benefits you receive might not be enough to cover all your bills after an accident.

Four people who should consider disability insurance.

Disability insurance protects your most valuable asset: their ability to earn an income. If your income is dependent on your ability to work, you should own disability insurance.

Why You Might Consider Disability Insurance

You might consider disability insurance if you want to protect your future earnings from unexpected disability. Sickness and serious injuries can happen at any time, and most people don’t have the resources to endure months of lost income from a sudden disability.

One in four people will become disabled during their working life, according to a recent fact sheet from the Social Security Administration (SSA). Despite this striking statistic, disability insurance is not particularly popular, as the same SSA fact sheet reports that “65% of the private sector workforce has no long-term disability insurance.”

Certain personal financial situations make purchasing disability insurance even more advisable, including being self-employed, paying off debt or having insufficient disability coverage from an employer.


If you’re self-employed, whether as a freelancer, contractor or small-business owner, disability insurance might be especially important for you. When you work for yourself, you don’t have the option of sick days or paid vacation to fall back on if you become disabled.

As a self-employed person, you can’t access disability coverage through an employer-sponsored plan, so you’ll have to purchase an individual policy unless you can qualify for Social Security Disability Insurance (SSDI).

Additionally, small-business owners should consider disability insurance if they have employees. When you own a business, your employees depend on your work and income for their livelihood. Disability benefits can help keep your business running if you’re unable to work. A disability insurance policy designed for business owners is known as a Business Overhead Expense policy.

Paying Off Debt

People who have outstanding debts to pay off, whether it’s student loans or credit card debt, might consider purchasing disability insurance to prevent falling deeper into debt. If you become unable to work due to an injury or illness and can’t make payments, your debt problem will only get worse as interest piles up and you fall further behind.

There’s even a special type of disability insurance dedicated to helping people continue to pay off debt if they become disabled. Credit disability insurance offers coverage of loan payments if the policyholder can’t work due to a disability. This type of policy may limit benefits to a certain number of loan payments or a total amount that the policy will pay towards the loans.

Insufficient Employer Coverage

Many people can access disability insurance through their employer, just like they would health insurance. These policies are a popular choice because they tend to be less expensive or even free, and they don’t require you to undergo a qualification process like an individual policy would.

However, some of those people find that group disability insurance (the kind that employers offer) doesn’t provide sufficient coverage. The premiums on these policies are lower, so they may not pay as much in benefits.

Receiving disability insurance coverage from an employer-sponsored plan means you’ll lose access to your coverage if you are terminated or switch jobs. You also won’t have the option to add riders and extra provisions to your policy if you’re getting group coverage.

Finally, employer-sponsored disability insurance doesn’t have the same tax advantages as an individual policy. If you receive benefits from an employer-sponsored plan, you’ll owe taxes on that income. But because the premiums on an individual policy are funded with after-tax dollars, you won’t have to pay tax on any disability payments you collect from that policy.

Frequently Asked Questions About Disability Insurance

Do I need short-term disability insurance?

If an illness or injury that puts you out of work for a month or two would seriously jeopardize your financial stability, you might consider short-term disability insurance.

Do I need long-term disability insurance?

Nearly every worker could benefit from long-term disability insurance because most could not withstand the financial hardship of being out of work for months or years due to an illness or injury.

Editor Samantha Connell contributed to this article.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: November 10, 2023