Imagine waking up tomorrow unable to work due to an illness or injury. How long could you keep paying your bills, covering your mortgage, or supporting your family without a paycheck? If you answered “not long,” you’re not alone. Forty-two percent of Americans say they could only cover expenses for a month or less if their income disappeared. Yet the role disability insurance plays in protecting income and overall financial wellness is often overlooked.

Do I need disability insurance?

Disability insurance serves as a protective shield, ensuring that income remains intact even when you are unable to work. In the current economic climate, where most workers cannot afford to lose their main income, individual disability insurance and long-term disability insurance are critical.

Who needs disability insurance the most?

Unfortunately, many Americans have misconceptions about disability insurance. One common myth is that disabilities only start at work. While people may be confounding disability insurance with Workers’ Compensation, the reality is that disabilities can occur at any time and place, making it essential to have coverage that protects you in all situations. Guardian’s new report, Futureproofing Your Income, reveals that there has been a significant drop in disability insurance ownership among American workers over the past seven years. In 2025, only 43% of workers had coverage, down from 51% in 2023.

When should people consider disability insurance?

The best time is before a disability strikes — ideally early in your career, when premiums are lowest and health is typically good. Major life milestones such as starting a family, buying a home, or becoming self-employed also signal it’s time to protect your income.

Recent data shows who is acting early:

• Women now represent 47% of policyholders, reflecting their growing role as primary financial decision-makers in households.
• Self-employed workers have also shown a 29% increase in ownership, highlighting the importance of income protection for freelancers.
• High-income households and those in the health care industry are more likely to have disability insurance, while Gen Z workers are less likely to be covered.

How much disability insurance should you have?

Most experts suggest replacing at least 60–70% of your after-tax income so you can keep paying fixed expenses—mortgage or rent, utilities, groceries—if a disability keeps you off the job. Employer plans usually cover only 50–70% of base pay, so you may need supplemental individual coverage to close the gap. This is particularly important for higher earners because monthly benefit caps may leave an even larger divide.

The financial impact of a disability leave can be devastating and long-lasting. The average short-term disability claim lasts six to seven weeks, while long-term claims can extend up to three and a half years. For those out of work for nine months or longer, the financial strain is significant, with 74% reporting a major or devastating effect on their finances. Many workers resort to withdrawing money from savings, investments, or retirement accounts.

How to decide if you need individual disability insurance?

Financial confidence starts with knowledge. Many people are unaware of the likelihood of needing to take a leave due to a disability and the potential financial distress it can cause. Educating yourself about the benefits of disability insurance and understanding how it can protect your lifestyle and family is crucial.

• Start by exploring income protection options at work, as many employers offer both short-term and long-term disability insurance.
• Keep in mind that most of those workplace benefits replace only part of your income, which may not cover all expenses. Individual disability is a great way to decrease that gap.
• Consider working with a financial professional to explore your options.

Disability insurance is a vital component of financial wellness, which has an outsized impact on overall well-being. It ensures that you are prepared for unexpected income loss due to illness or injury, helping to provide further peace of mind and financial stability. By understanding the importance of disability insurance and taking proactive steps to secure coverage, you can futureproof your income and protect your financial wellness.