Disability insurance pays a portion of your income if you cannot work due to an illness or injury. Employer-sponsored plans often have limits on benefits and an “Individual Disability Insurance” (IDI) policy can provide a more comprehensive level of income protection on their own or layered with an employer policy. IDI policies are:
Owned by you and stay with you no matter where you work.
Fills in the benefit gap an employer plan may have.
Typically provides additional benefit enhancements for catastrophic illness/injury.
Disability coverage is important because it protects your paycheck when you can’t work, and IDI provides a steady income stream so you can pay for ongoing life expenses. IDI comes with strong guarantees since your coverage cannot be changed or canceled as long as you continue paying premiums, and your costs remain stable during the policy period.
The built-in benefits of an IDI policy are typically more robust than an employer plan, and premiums are waived while you are receiving benefits. Unlike most employer plans, a typical IDI policy benefit is NOT taxable! Other typical features include:
More generous disability and income loss definition.
Rehabilitation benefits to provide financial support for programs that help you return to work.
Premiums are waived while you are disabled.
Residual disability - pays a partial benefit if you can still work part-time.
Can include supplemental benefits if you experience serious conditions or cognitive impairment.
Can include a “cost of living” benefit increase from year to year.
Option to base the income loss on the inability to perform your “own” occupation (as opposed to paying a benefit based on your ability to perform another occupation).
Many employers offer group disability insurance, which provides a good foundation but often leaves gaps. Group coverage usually pays only 50 to 60 percent of base salary and may have monthly caps. Benefits are also often taxable if your employer pays the premiums.
Individual coverage can be layered on top to protect more of your income, including bonuses or commissions. Group coverage also typically ends when you leave your job, while an individual policy stays with you for the long term. In addition, group policies sometimes shift from an “own occupation” definition to an “any occupation” definition after a certain period, which makes qualifying for benefits more difficult. With individual coverage, you can secure a stronger own-occupation definition that continues to protect your specific career. Together, group and individual disability coverage create a more complete safety net.
It makes sense to explore individual disability insurance if you rely heavily on your income and losing it would cause financial strain. This coverage is also valuable if your employer plan is limited or excludes bonuses, commissions, or higher earnings. Self-employed individuals, who do not have access to employer-sponsored plans, especially benefit from individual protection. It is also worth considering if you want portable coverage that stays with you through career changes or if you have long-term financial goals, such as retirement savings or college funding, that depend on consistent income.
While this protection is valuable for anyone, it is most often sought by high-income professionals such as physicians, attorneys, executives, and business owners who want to safeguard significant earnings. Self-employed workers are another common group since they lack employer-provided disability benefits. Many young professionals also purchase coverage to lock in affordable premiums early and protect their future earning potential. Families who depend on a steady paycheck to cover housing, childcare, and education expenses often prioritize this type of protection as well.
Your income is your most valuable asset. Protecting it with individual disability insurance ensures financial stability when life takes an unexpected turn. With strong built-in benefits, optional riders, and the ability to complement group coverage, it is a smart addition to any financial plan.