Disability insurance,
coverage for lost earnings.

What disability insurance is

You are about 1.8 times as likely to experience a disability as to die during working years verify×DON'T TRUST, VERIFYClaim: A 20-year-old insured worker has a ~1 in 4 (24%) chance of becoming disabled before retirement, versus a 13% chance of dying before it.Verify at: SSA Actuarial Note 2026.6 ↗ and SSA disability facts ↗ Source 1 in the list belowSSA Office of the Chief Actuary, Tables A and B (2026 Trustees Report intermediate assumptions): 23.6% disabled vs 13.2% dead before age 67, a ratio of 1.8.. A disability does not have to be dramatic. Back problems, mental-health conditions, repetitive-stress injuries, and cancer are the most common causes of claims.

Without disability insurance, your savings are your only protection if you cannot work. With it, a monthly benefit replaces a portion of your income during disability.

For early-career workers: DI as human-capital insurance

If you are in your 20s or early 30s, you do not yet have meaningful financial capital. What you have is human capital: the present value of every paycheck you will earn over the next ~40 years. For a typical college-educated worker in their mid-20s on a $60K starting salary with average wage growth, that future earning stream is worth approximately $900K to $1.5M in today's dollars, more than any other asset you will own until your 50s.

You would never carry a $1M asset uninsured. Most early-career workers carry their entire human-capital balance uninsured, because they think of insurance as a thing you buy for cars and houses, not for the engine that pays for both.

The mid-career figure that follows is a different measure: undiscounted total earnings (salary times remaining working years), not a present value like the $900K to $1.5M above. Your ability to earn is by far your most valuable asset in your 30s and 40s. A 35-year-old earning $120K has roughly $3.6M in future lifetime earnings at a modest 0% real growth. Very few people would leave a $3.6M asset uninsured.

The priority stack for protection (early-career)

Insurance is a budget question. Here is the order of operationsOrder of operationsA default sequence for spare money after essentials and minimum payments: a starter emergency fund, any employer retirement match, high-interest debt, a full emergency fund and tax-advantaged accounts (HSA, Roth IRA, more 401(k)), then taxable investing. Vesting, unstable income and near-term goals can shift it.Full definition for a single, healthy worker without dependents, ranked by annual-cost-per-dollar-of-asset-protected:

Why premiums only get worse

• Age. Underwriting moves materially worse every 3–5 years. The same own-occ policy at 35 costs 1.5–2× what it costs at 25.
• Health events. Any chronic condition discovered between application and renewal can disqualify you from new coverage or trigger exclusions. Back issues, mental-health diagnoses, autoimmune conditions, and cancer scares are the most common deal-breakers. Most are diagnosed in the 30s and 40s.
• Lifestyle changes. Pilot training, motorcycle ownership, recreational climbing, and certain hobby disclosures all affect underwriting. A clean medical profile at 25 means a wider menu of carriers than the same person at 35 with a marathon habit and a Honda Africa Twin in the garage.
• Carrier exits. Carriers periodically stop writing new own-occ policies in specific specialties. The number of A-rated own-occ carriers writing physician policies, for example, dropped from ~12 in 2010 to ~6 in 2026. The window where you can shop is narrower than it appears.

If your employer offers group DI that is portable and own-occ, that may be sufficient for now. If it is any-occ or non-portable (the common case), buy a stripped-down individual own-occ policy in your 20s for the lock-in. The $600–1,000/yr is small relative to the human-capital balance it protects and the future-underwriting risk it eliminates. See in your 20s and first job for the broader early-career money sequencing.

Short-term vs long-term

Two very different products that often get confused.

If you have a fully funded 3-to-6-month emergency fund, you can usually skip private STD and focus on a strong LTD policy.

Own-job vs any-job

This is the most important distinction in disability coverage.

Who needs own-job most: high-income, high-skill workers whose income is tied to a specific physical or cognitive ability. Surgeons, dentists, attorneys, engineers, musicians, athletes. Workers whose skills are broadly transferable can often get by with any-job.

If you cannot get true own-occ, look for "modified own-occ" language and read carefully. The policy text matters more than the marketing page.

Employer group coverage

Understand what you have. Typical employer group policy: 60 to 70% of salary as a benefit, any-job definition (often after 24 months), not portable when you leave, taxable benefits when the employer pays premiums.

Two of those limits cut deeper than the headline percentage suggests, and the second one is the taxability switch below:

• Only 60% of base salary - bonus, commission, and RSURestricted Stock Unit (RSU)Company shares your employer promises to give you over time, usually a chunk every year for four years. The shares are taxed as regular wages on the day each chunk lands in your account.Full definition income often do not count.
• Taxable if the employer pays the premium - your actual take-home hit can be closer to 40-45% of pre-disability income.

Individual policy

Buy individual coverage when you are high-income with specialized job, have gaps in employer coverage, are self-employed, or when employer coverage is any-job and you need own-job.

What to look for

• Own-job definition for your specific specialty
• Non-cancelable and guaranteed renewable: insurer cannot change terms or raise premiums after issue
• Benefit period to age 65 (or 67), not just 2 or 5 years. Shorter periods are cheaper and mostly defeat the purpose.
• Elimination period: how long before benefits start (90 days is standard; your emergency fund covers this window). Longer waiting period = lower premium, but requires a solid emergency fund.
• Coverage amount: typically 60 to 70% of gross incomegross incomeYour total income before any taxes or deductions are subtracted.. Carriers cap what they'll sell you, which is why you stack employer + individual.
• COLACost-of-Living Adjustment (COLA)An automatic raise to Social Security or pension payments each year, sized to match how much prices have gone up. rider: benefits adjust for inflationinflationA general increase in prices over time, meaning each dollar buys less than it did before.Full definition; worth it for long-tail claims
• Future purchase option rider - lets you buy more coverage as income grows without new medical underwriting.

Where to get quotes

Hire an independent insurance broker who represents multiple carriers, not a captive agent. For physicians and dentists, specialty-specific carriers like Guardian, Principal, and Mass Mutual are typical. For fee-only advisors who can review needs, check NAPFA ↗.

Unlike life insurance, disability is not a simple commodity. The contract language, definitions, and riders matter enormously. Use a specialist broker rather than a general agent.

• Top carriers: Guardian, MassMutual, Principal, Ameritas, Standard.
• Typical cost: 1-3% of income per year for a good policy. Higher for surgeons, dentists, and a few other trades.
• Professional association discounts often knock 10-25% off the retail price.

The two price figures on this page agree: $600 to $1,000 per year on a $60K starting salary is 1 to 1.7% of income, inside the 1-3% range.

Bitcoin and disability

As net worth grows, disability insurance becomes less critical. Calculate your "FU number" via FIRE Calculator. Before reaching it, your income is your most valuable asset. Protect it.

A Bitcoin DCADollar-cost averaging (DCA)Investing a fixed amount on a regular schedule, such as $50 every payday, regardless of price. It spreads out when money enters the market and buys more units when prices are low, but it does not guarantee a better price than investing all at once, a profit or protection against loss.Full definition strategy assumes continued income. A disability that stops income also stops the accumulation. Disability insurance keeps the strategy intact if the body does not.