What would happen if you couldn’t work for several months — or worse, if you were no longer here to support your loved ones? It’s not a pleasant scenario to imagine, yet it raises an important question: Is life insurance enough, or should you also consider disability coverage?
According to the Social Security Administration, one in four 20-year-olds will experience a disability before reaching retirement age (1). That’s not a small number. While life insurance can help support your family financially after your passing, disability insurance can help protect you — and your income — while you’re still alive but unable to work.
Understanding the Difference
Life insurance provides a death benefit to your beneficiaries if you pass away. It’s designed to help replace lost income, cover debts, or assist with future expenses, such as college tuition or living costs.
Disability insurance, on the other hand, steps in when an illness or injury prevents you from earning an income. It can replace a portion of your paycheck, often between 40% and 60%, helping you stay financially stable while recovering or adjusting to new circumstances.
Why Both Can Matter
Many people assume they only need one type of coverage, but these two serve different purposes. Life insurance helps take care of those you leave behind, while disability insurance helps take care of you when life takes an unexpected turn.
If you’re in your peak earning years, your ability to work may be your most valuable asset. A disability, even temporary, can disrupt not just your income but also your long-term savings goals. Without that steady income stream, contributions to retirement accounts might slow down, creating ripple effects that last long after recovery.
Balancing Costs and Coverage
Of course, insurance premiums can add up. The appropriate mix depends on factors such as your family situation, savings, employer benefits, and overall financial approach. Some employers offer short- or long-term disability insurance as part of their benefits package — but these policies often replace only a portion of your income and may not last until retirement.
If you already have substantial savings or other income sources, you might decide one form of coverage is sufficient. However, for many, a combination of both life and disability insurance can offer broader protection — helping to safeguard both their present and their family’s future.
Final Thoughts
Both life and disability insurance address different “what ifs”, one about life end, the other about life interruptions. The key question isn’t necessarily which one, but how much risk you’re comfortable taking without either.
Have you recently reviewed your coverage to see if it still aligns with your current needs? A suitable protection approach isn’t just about insurance — it’s about helping maintain financial stability when life changes unexpectedly.
If you’d like to explore how different types of coverage may fit into your overall income approach, consider scheduling a complimentary meeting to review your available options.
Source:
(1) Social Security Administration. “The Facts About Social Security’s Disability Program.” SSA.gov, 2024.
Insurance products are offered through licensed insurance professionals. Product availability, features, and benefits may vary by state and carrier.
The information provided is for informational purposes only and is not intended as tax, legal, or investment advice. Please consult with your own attorney, accountant, or tax professional for guidance specific to your situation.
Life insurance and disability insurance policies are subject to underwriting approval. Policy guarantees are based on the claims-paying ability of the issuing insurance company.
Any discussion of potential benefits is not a guarantee of future results and will vary based on individual circumstances.
