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Disability Insurance

Disability insurance replaces a portion of your income if you can't work due to illness or injury. Short-term policies cover 3–6 months; long-term policies cover years or until retirement age.

By the TRRP Editorial TeamUpdated 2026SSA · IRS · CMS data

Definition

Disability insurance replaces a portion of your income if you can't work due to illness or injury. Short-term policies cover 3–6 months; long-term policies cover years or until retirement age.

Why it matters in retirement

For working pre-retirees, your biggest asset is your ability to earn an income. Becoming disabled before you've finished saving can derail retirement faster than any market crash. If you're still working, own-occupation long-term disability is one of the most valuable insurances you can buy.

Key numbers · 2026
Odds of disability before 65
~25%
Typical LTD replacement
60% of income
Avg LTD premium
1–3% of income
Elimination period
90–180 days
Pros
  • Protects earning years
  • Own-occupation contracts are broad
  • Benefits tax-free if you paid with after-tax premiums
Cons
  • Group policies often "any occupation" (weaker)
  • Pre-existing conditions excluded
  • Not useful after retirement

Common mistakes

  • Relying solely on employer group coverage (often inadequate)
  • Confusing "any occupation" with "own occupation" definitions
  • Canceling too early — 50-somethings are peak earners
  • Skipping cost-of-living riders on long-duration policies
The part most people miss

Your employer's group LTD often tops out at $5,000–$10,000/month and uses an "any occupation" definition after 24 months — meaning if you can work as a Walmart greeter, benefits stop. High earners almost always need supplemental private coverage.

When you’re ready

Want help applying disability insurance to your situation?

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