Is Long-Term Disability Insurance Worth It?

Professional Reviewer: Paul Thomas, LUTCF, CLTC
Registered Representative, Mutual of Omaha Advisors

Summary: Disability insurance helps safeguard your income if illness or injury prevents you from working by replacing 50-70% of your earnings. Though an added cost (1-3% of income), it offers significant protection against long-term disabilities. Despite waiting periods, its benefits often outweigh the drawbacks, providing some peace of mind.

Disability insurance isn’t a common coffee-table topic.

It doesn’t feel urgent… until it is.

Even if you’re healthy and working, consider this: if you temporarily could not work, how would you manage your bills, housing, and food costs? That’s where the big question comes in: Is disability insurance worth it?

It’s a key consideration for anyone who wants to protect their financial stability in the face of unexpected challenges.

What is disability insurance?

Disability insurance helps protect your income when a serious illness or injury prevents you from working. It helps ensure that if life takes an unexpected turn, your finances stay on steady ground.

There are two main types of coverage: short-term and long-term.

• Short-term disability insurance usually covers you for a few weeks to several months. It’s helpful if you’re dealing with a temporary condition, like recovering from surgery or a complicated pregnancy.
• Long-term disability insurance offers protection when you’re out of work for a longer period, sometimes even years. It typically kicks in after short-term benefits end and can help you cover essential expenses while focusing on recovery.

Both types serve important purposes, but this article will focus mainly on long-term disability insurance.

Why is disability insurance worth it for many people?

Disability happens more often than we think. According to the Social Security Administration, more than 1 in 4 current 20-year-olds will become disabled before they retire.¹

Disability is designed to replace a portion of your income—typically between 50% and 70%—so you can still pay your bills, cover your mortgage, and support your family while you recover.

Here are some common examples of situations where long-term disability insurance may prove invaluable:

• A 45-year-old parent recovering from cancer treatment: While going through months of chemotherapy and unable to work, disability checks helped keep the household financially stable.
• A warehouse worker with a back injury: While helping a friend move over the weekend, a warehouse worker suffered a serious back injury. Although it didn’t happen on the job, the injury kept him from working for nearly a year. Disability insurance helped replace his lost income, allowing him to cover everyday expenses without relying on credit or draining his savings.
• A small business owner recovering from a stroke: With income on hold and medical bills rising, a business owner’s policy gave her the breathing room she needed to focus on recovery without shutting down her business.

These scenarios show why disability insurance may be worth it for many people. It’s not just about income. It’s about security and peace of mind when life takes a sudden turn.

Is disability insurance worth the cost?

When you first look at the numbers, disability insurance might seem like just another monthly expense. But when you compare the cost to the financial protection it offers, it becomes clear why many may consider it a practical way to safeguard their income.

On average, long-term disability insurance costs about 1% to 3% of your annual income. That means if you earn $60,000 a year, your premiums could range from $1,200 to $1,800 annually, or roughly $100 to $150 a month.

Now consider what you’re getting in return: if you become disabled and can’t work, that same policy could replace 60% of your income. In this example, that’s up to $36,000 per year—paid out while you recover or until your benefits period ends.

Without coverage, you’d have to rely on emergency savings, borrow money, or drastically cut expenses to make ends meet. For most people, that’s a tough financial road, especially if the disability lasts months or even years.

When you weigh the relatively low cost of coverage against the potential income loss, it becomes easier to see why disability insurance may be worth the cost for many individuals and families.

Long-term disability insurance: pros and cons

Like any form of insurance, long-term disability coverage comes with both advantages and trade-offs. Knowing what it offers—and what it doesn’t—can help you assess whether it aligns with your financial needs and priorities.

Pros

• Income protection during tough times: If you’re unable to work because of a serious illness or injury, this coverage can replace a portion of your income, typically 50% to 70%, so you can keep up with essential expenses while you recover.
• Peace of mind for the unexpected: Disabilities aren’t always rare or extreme. Whether it’s a back injury, cancer treatment, or mental health condition, knowing you’re financially covered helps reduce stress during an already difficult time.
• Coverage through work: Many employers offer long-term disability insurance as part of their benefits package, often at a lower group rate. Some even cover the premiums entirely, making it an easy way to get protected with little hassle.

Cons

• Waiting period before benefits kick in: Most policies include an elimination period—often 90 to 180 days—before benefits begin. That means you’ll need a plan in place to cover short-term expenses during that time.
• Policy limitations: Some policies come with exclusions for pre-existing conditions or specific types of illnesses or injuries. It’s important to read the fine print so you’re not caught off guard when you need the coverage most.

So, is disability insurance worth it?

For many, yes—especially if losing your income would put you or your family in a tough spot. But it really depends on your needs, savings and job type. A Mutual of Omaha financial professional can help you explore coverage options from a variety of carriers, offering flexibility in both features and price points.

Not sure how much coverage you need? Contact us today.

Frequently Asked Questions

Q1: How do I figure out how much disability insurance I need?

Start by calculating your essential monthly expenses—like housing, utilities, food, and debts. Then compare that to what employer coverage provides, if available. If there’s a gap, consider how much additional coverage you’d need to maintain your standard of living during a period you’re unable to work.

Q2: What factors should I consider when deciding if disability insurance is right for me?

Think about your savings, whether others rely on your income, the risk level of your job and what coverage your employer offers. You’ll also want to consider how long you could manage without a paycheck and whether your current benefits would be enough to sustain your lifestyle if you couldn’t work for an extended period.

Q3: What are alternatives to long-term disability insurance?

Alternatives include a strong emergency fund, short-term disability, critical illness insurance or spousal income support. While these options may offer some financial relief, they often provide more limited or shorter-term coverage compared to long-term disability insurance, so it’s important to understand their limitations when evaluating your overall protection strategy.

Sources

1. Social Security Administration, Disability Benefits, February 2025

Professional Reviewer: Paul Thomas, LUTCF, CLTC

Registered Representative, Mutual of Omaha Advisors

Before entering the financial services industry, Paul served his community as a Police Officer. He is a U.S. Army veteran and also served his country as a contractor in Afghanistan, working alongside various U.S. military units. Paul has earned the Life Underwriting Training Council Fellow (LUTCF) and Certification of Long-Term Care (CLTC) designations. He also holds Series 6 and 63 securities registrations. Paul is a proud member of the Million Dollar Round Table (MDRT), the premier association of financial professionals. He currently lives in Wisconsin with his wife, Kathy.

Disclosures:

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.  Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.

All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are registered representatives or financial advisors.

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