If you can’t work because of an injury or illness, disability insurance covers your income and pays out every month so that you don’t have to worry about keeping up with your expenses.
When people talk about disability insurance, they usually mean an individual policy that you buy for yourself, but you may also get group disability insurance as a work benefit or qualify for Social Security Disability Insurance (SSDI). Policygenius can help you compare disability insurance quotes to find your best rates.
What exactly is disability insurance?
Disability insurance is a form of income protection. If you’re hurt or sick and can’t work, you can file a claim and your disability insurance will pay out in regular installments until you go back to work or until the policy term ends.
Just like with other kinds of insurance, you have to buy a disability insurance policy before you actually need it and then keep it active by making regular payments.
→ Read more about short vs. long-term disability insurance
How does disability insurance work?
Here are some fast facts about disability insurance you’ll need to know in order to use your coverage:
How long does it take to start getting paid? You’ll start getting benefits after your policy’s elimination period ends, not right after you make a claim.
Who receives the payments? The benefits, or payments, go straight to you. Some policies include benefits for a child or family member too.
How are disability benefits paid? Disability insurance payouts can go directly into your account, just like a paycheck.
How often do you get benefits? Short-term disability policies usually pay out weekly and long-term policies typically pay out monthly.
What can you use your benefits for? You can use your benefits just like your regular income, on things like rent, transportation, childcare, and groceries.
What happens if you go back to work? Some policies will continue paying benefits if you go back to work in a different job, others offer reduced benefits or stop them completely as soon as you can work again.
Does disability insurance cover medical care?
You can use your disability benefits to pay for medical expenses, but your policy won’t pay any benefits directly to a hospital or doctor’s office like your health insurance does.
What kinds of things does disability insurance cover?
Disability insurance covers lots of different injuries and illnesses that can keep you out of work, including:
Disability insurance policies also have exclusions, meaning certain types of illnesses or injuries that aren’t covered. These can vary from policy to policy but typically self-inflicted injuries are excluded from coverage, along with injuries you got while doing something illegal.
→ Read more about what disability insurance does and doesn’t cover
Why does disability insurance matter?
Having disability insurance can be essential in guaranteeing your family’s financial security, though, while 46% of U.S. say they need disability insurance, only about 18% of people actually have a policy, according to a 2024 survey conducted by LIMRA and Life Happens. [1]
Disability insurance is especially important for people with specialized careers, high-incomes, or dependents who rely on their income. And the younger you are when you get a policy, the more of your future earnings you’ll protect.
Where do you get disability insurance?
This depends on what kind of disability insurance we’re talking about, since some types of policies are offered as a work benefit and some you have to go out and buy for yourself.
Group disability insurance: Assuming it's available, you can opt in to group disability insurance just like with other employer-sponsored benefits. Group disability insurance is usually short-term coverage and you can’t take it with you when you leave your job.
Social Security Disability Insurance (SSDI): SSDI is free, but only about a third of applicants qualify for benefits. You have to follow strict rules to keep your benefits and the average recipient gets less than $2,000 a month.
Private disability insurance: You buy a personal disability insurance policy directly from an insurance company or through an insurance marketplace like Policygenius. An individual, long-term policy offers the best protection.
→ Read more about how to buy disability insurance
How much does disability insurance cost?
Individual disability insurance generally costs about 1 to 3% of your annual income. That means that someone making $150,000 would pay between $125 and $375 a month for a policy. Your rates may vary depending on your job, age, health, lifestyle, and other details.
Disability insurance that you get through work is different. Coverage is often free or subsidized by your employer, but you’ll pay taxes on any benefits you get from a group policy if it’s paid for with pre-tax dollars.
