The Complete Guide to Disability Insurance: Protecting Your Paycheck
Imagine waking up one morning and realizing you cannot go to work because of an injury or illness. Your bills don’t pause, your household still has expenses, and your ability to bring in income is suddenly gone. That paycheck hasn’t just been “nice to have.” It has been the backbone of your financial life. However, only 43 percent of working Americans reported owning a disability insurance policy in 2025. (Source: Guardian Life)
Now think about what happens if your income stops. Government benefits, such as those from Social Security Disability Insurance, average around $1,582 per month as of April 2025 (Source: Student Loan Planner). For many households that simply won’t cover everything, this guide is designed for you, to show why protecting your pay matters, how to figure out how much coverage you need, and how to decide between employer-provided and individual disability plans.
Why Income Protection Matters
The odds of facing a disability that disrupts your work are much higher than most people believe. Based on data from the American Community Survey, out of the 330,062,000 civilians living in the community in 2023, 44,680,000 were with disabilities (Source: Center for Research on Disability).
With only 43% of working Americans having a disability insurance policy, this means millions of workers are vulnerable to financial disruption if illness or injury prevents them from earning. Without adequate coverage, people often drain savings, pause retirement contributions, or take on debt just to stay afloat. Disability insurance is not just an optional safeguard. It is a key part of maintaining financial stability when you cannot work.
Calculating How Much Coverage You Need
Start by listing your monthly expenses, such as housing (rent or mortgage), utilities, food, transportation, debt payments, insurance premiums and savings contributions. Then determine what income you might still receive if you became disabled. This might be spouse income, part-time work ability, or maybe some government benefits. The gap between your current earnings and that remaining income is what you should aim to replace. A commonly recommended target is 60 percent to 70 percent of your pre-disability income. (Source: Guardian Life)
Premiums for individual long-term disability policies typically range between 2 percent and 4 percent of annual income (Source: Student Loan Planner). For instance, if you earn $70,000 per year and aim for 65 percent income protection (about $45,500 per year in coverage), a 3 percent premium rate would mean roughly $2,100 per year in premiums, which is around $175 per month. When compared to the risk of losing your income entirely, that cost is often considered reasonable.
Employer Coverage Versus Individual Policies
Employer-provided disability insurance often seems like a built-in benefit and it is. You may have access without underwriting and at low cost. But that coverage often comes with limitations, as it may replace only 50 percent of your income, have narrow definitions of disability, and it may end when you leave the employer. Individual policies give you greater control over benefit amounts, waiting period before benefits start, benefit duration, and what counts as “disabled.”
A key feature is portability, your policy sticks with you if you change jobs. Many advisors recommend using employer coverage as a foundation and layering an individual policy to fill the gap (Source: Set for Life Insurance). That way you don’t rely entirely on what your employer offers, which may not be enough.
How SLD Solutions Can Help You Build a Smart Plan
Your paycheck supports your home, your family and your future plans. When your ability to earn is threatened, everything else becomes vulnerable. With only 43 percent of working Americans owning disability insurance and average government benefits well below most household costs, now is the time to act.
Use the guide above to estimate your needs, compare employer versus personal policies and engage with SLD Solutions to build a plan that genuinely protects your income. The organization takes a personalized approach to income protection. Schedule an appointment with SLD Solutions today and build the income protection you deserve.
