Disability Insurance - How Much Do You Need?

Posted: 6 years, 7 months ago

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Updated December 2025

How Much Disability Insurance Do You Really Need in 2025?

Most people insure their home, their car, and even their phone—but forget to insure the one thing that pays for everything: their income. May is still recognized as Disability Insurance Awareness Month, making it the perfect time to talk about how you protect your ability to earn a living. While awareness has improved, the gap is still significant:

• A majority of working Americans worry about becoming sick or injured and being unable to work

• Yet less than one in four workers have any form of individual disability insurance

In 2025, with rising living costs, student loans, mortgages, and fewer employer safety nets, losing your paycheck—even temporarily—can create immediate financial stress.

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The Reality of Disability Risk

Many people assume disability insurance is only necessary for physically demanding or “dangerous” jobs. In reality, the data tells a very different story.

Here’s what still surprises most people:

• Roughly 30% of workers will experience a disability lasting 90 days or longer at some point during their career

• Over 90% of disabilities are caused by illness, not accidents

  • Cancer

  • Heart disease

  • Autoimmune disorders

  • Mental health conditions

  • Complications from surgery

You don’t need to work construction or climb ladders for disability risk to be real.

Why Employer Disability Coverage Often Isn’t Enough

Many employees assume they’re covered through work—but employer-sponsored disability plans often fall short. Common limitations in group disability plans include:

• Coverage of only 40–60% of income

• Benefits that are taxable, reducing your actual take-home amount

• Caps that don’t adjust for higher earners

• Limited portability if you change jobs

• Narrow definitions of disability

In 2025, relying solely on employer coverage can leave a serious income gap.

So… How Much Disability Insurance Do You Need?

The goal of disability insurance is simple: Replace enough income to keep your life stable if your paycheck stops. Start by looking at your essential monthly expenses:

• Housing (mortgage or rent)

• Utilities

• Food

• Transportation

• Insurance premiums

• Debt payments (student loans, credit cards, car loans)

• Childcare or tuition

• Healthcare costs

Then consider:

• How long could you realistically go without income?

• Do you have emergency savings—and how long would they last?

• Would your household still function if only one income remained?

Most individual disability policies are designed to replace 50–70% of your gross income, depending on your occupation and health profile.

Key Disability Insurance Features to Understand in 2025

When reviewing disability insurance, coverage details matter just as much as the benefit amount. Important features include:

• Own-Occupation Coverage – Protects you if you can’t work in your specific job

• Benefit Period – How long benefits last (2 years, 5 years, to retirement age)

• Elimination Period – How long you wait before benefits begin

• Cost-of-Living Adjustments (COLA) – Keeps benefits aligned with inflation

• Partial Disability Benefits – Pays if you can work but earn less due to illness or injury

This isn’t a one-size-fits-all decision—and that’s where guidance matters.

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Protect the Income That Protects Everything Else

Disability insurance isn’t about expecting something bad to happen. It’s about planning responsibly for the reality that life doesn’t always follow a schedule.

At Top O’ Michigan, our Licensed Solution Providers help you:

• Understand how much coverage you actually need

• Compare individual and supplemental disability options

• Coordinate coverage with employer benefits

• Build protection that fits your career and financial goals

???? Call 800-686-8664
???? Email Service@TOMIA247.com

 

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