What does disability insurance cover?

Do you have a financial plan if you're sidelined by illness or injury? According to the Social Security Administration, close to one in four 20-year-olds will face a disability that interferes with their ability to work before they're ready to retire.

Disability insurance can replace lost income if you can't work because of a health issue unrelated to your job. But, in 2024, less than half of private-sector workers had access to disability benefits through work.

Here's what you need to know about disability insurance, including where you can buy it, the types available and how to decide if it's right for you.

Short-term disability insurance (also known as paid medical leave) replaces your income if you're sidelined by a health issue, typically for between 3 and 12 months. Common reasons for payouts include accidents, injuries, illnesses, pregnancy and maternity leave.

Short-term disability usually replaces between 50% and 80% of your wages until you return to work or hit a predetermined limit. It's often available through your employer — California, Hawaii, New Jersey, New York and Rhode Island require companies to provide coverage, though the terms and limits differ.

Your employer may fully or partially cover your premium or you may have to pay for it yourself. Some employers allow workers to buy additional coverage beyond what is offered.

If you don't have disability insurance through work, Breeze is an online broker that provides quotes from leading providers. A short-term disability policy with Breeze can replace up to 60% of a policyholder's weekly income, with benefit periods ranging from three months to two years.

Depending on your age, health history, lifestyle and other factors, monthly rates can range from a few dollars to more than $100. Policies are available that cover both illness and accidents or just accidents.

Intended for more serious illnesses or injuries, long-term disability replaces between 40% and 70% of your income for as little as 24 months or as long as the remainder of your working years, according to the National Association of Insurance and Financial Advisors (NAIFA).

Most plans have a waiting period of three to six months before benefits kick in, according to the Patient Advocate Foundation, though it can be as long as a year. If you've paired it with short-term coverage, your long-term benefits will usually kick in when your short-term disability runs out.

A long-term policy can also be issued through an employer or a private insurer. Employer-backed policies expire when you leave the company, though, while an individual plan is portable from job to job. While premiums vary, an individual long-term disability policy typically costs between 1% to 3% of your salary, according to NAIFA.

One of the nation's largest providers of long-term disability, The Standard® has policies that can supplement your income through age 67. There's an automatic 4% benefit increase annually for the first five years and policyholders can add more without the need for a medical exam.

You can add a rider that allows you to receive benefits while working in a different field and a catastrophic disability rider that pays out if you're severely disabled or unable to carry out the activities of daily living.

Supplemental disability insurance covers gaps in an employer-sponsored short- or long-term policy. It offers higher payouts, longer coverage periods and tax-free benefits. And, unlike a workplace policy, supplemental coverage can be taken with you when you change jobs.

Mutual of Omaha offers standout coverage in this space with its Mutual Income Solutions, which provides short- and long-term coverage paying $300 to $20,000 per month in $100 increments, depending on the policy. There is also an automatic no-cost increase that bumps your available payout by 4% each year.

Disability insurance can help anyone who counts on a paycheck, especially if there is a spouse, children, elderly parents or others depending on their income for support.

Though Social Security offers a safety net for those injured or sidelined by illness, the requirements are stricter and the benefits are less robust: In 2025, the average monthly Social Security Disability Income check is just $1,583.

The best time to apply for disability insurance is before you need it, so you don't have to worry about being rejected or being hit with high premiums.

Most employers provide short-term disability coverage, according to the Insurance Information Institute, while about half of large and mid-sized companies offer long-term disability insurance.

That doesn't protect self-employed individuals and business owners — and it doesn't mean your company offers adequate coverage. Group disability plans tend to have less flexibility, shorter coverage periods and are more restrictive about what constitutes a disability.

If your company is paying the premiums, you'll have to pay state and federal income taxes on any payouts, according to the IRS.

Look at the disability benefit your employer provides compared to your income, debts and financial goals. If it falls short or you work for yourself, a standalone disability insurance policy may be the right call.

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Correction: An earlier version of this story misstated that Guardian Life offers short-term disability insurance to individuals.