Individual Disability Insurance

Individual disability insurance pays you a monthly benefit — typically 50–66% of your pre-disability income — if an illness or injury prevents you from working. Think of it as income replacement insurance. It covers disabilities caused by both accidents and illnesses, including back injuries, cancer, heart disease, mental health conditions, and neurological disorders. Unlike health insurance, which pays your medical bills, disability insurance replaces the paycheck you can no longer earn. It keeps the lights on, the mortgage paid, and your family financially stable while you recover.

More likely than most people think. Studies consistently show that about 1 in 4 of today's 20-year-olds will experience a disability lasting 90 days or more before they reach retirement age. Most people assume disabilities come from accidents, but the reality is that illnesses — cancer, heart disease, back problems, and mental health conditions — cause the majority of long-term disability claims. If you depend on your income to pay your bills and support your family, disability insurance isn't optional coverage; it's foundational protection.

Short-term disability covers temporary disabilities and typically begins paying within 0–14 days of becoming disabled. Benefits usually last 3 to 12 months. It bridges the gap while you recover from surgery, a serious illness, or an injury. Long-term disability kicks in after a longer waiting period — usually 90 days — and can pay benefits for several years, to age 65, or even for life depending on the policy. The two types are designed to work together, so you're covered from day one of a disability through recovery or retirement. Brad can help you build a strategy that fills the gaps in any employer coverage you already have.

Only partially — and with significant limitations. Workers' compensation only covers disabilities that happen on the job. If you're diagnosed with cancer, have a heart attack, or get injured off the clock, workers' comp pays nothing. Social Security Disability Insurance (SSDI) requires that you be unable to perform any work at all, not just your current job — and about 62% of initial applications are denied. Even if approved, SSDI benefits average only around $1,500/month, which falls far short of most people's income. A private disability policy is the only way to reliably replace your actual income from any cause, on or off the job.

This is one of the most important terms in any disability policy. An "own occupation" definition means you receive benefits if you can no longer perform the duties of your specific job — even if you could theoretically work in another field. For example, a surgeon who injures their hands would receive full benefits even if they could still teach or consult. An "any occupation" definition only pays if you are unable to work in any job you are reasonably suited for by education or training. This is a much harder bar to clear and can result in denied claims for people who are clearly unable to do their own job. Own-occupation coverage costs more but provides far stronger protection — especially for professionals, tradespeople, and skilled workers.

The elimination period is the waiting period between when your disability begins and when your benefits start — similar to a deductible but measured in time instead of dollars. Common elimination periods are 30, 60, 90, or 180 days. The longer your elimination period, the lower your premium. Most people choose 90 days, which strikes a balance between cost and coverage. The key question is: how long could you cover your living expenses from savings or sick leave before you'd need disability income to kick in? If you have 3–6 months of emergency savings, a 90-day elimination period works well. If you have thinner reserves, a shorter elimination period may be worth the higher premium.

Most disability insurance policies replace 50–66% of your gross pre-disability income. Insurance companies cap benefits at this level intentionally — the idea is to provide meaningful income replacement while still giving you financial motivation to return to work when able. For example, if you earn $80,000 per year ($6,667/month), a typical long-term disability policy might pay $3,300–$4,400 per month. Some policies include a cost-of-living adjustment (COLA) rider that increases your benefit over time to keep up with inflation — a valuable option for long claims. Brad can help you calculate the right benefit amount based on your actual monthly expenses.

It depends on who paid the premiums. If you pay your disability insurance premiums with after-tax dollars — which is the case for individual policies Brad helps clients purchase — your benefits are generally received tax-free. This is a significant advantage: a $4,000/month tax-free benefit is worth more in real take-home value than a $4,000/month taxable benefit. If your employer paid the premiums (common with group plans), the benefits are typically taxable. This is another reason why owning your own individual policy, rather than relying solely on an employer plan, is often the smarter financial move.

Not necessarily — but it may affect your coverage. Unlike ACA health insurance, individual disability policies are medically underwritten, meaning the insurance company reviews your health history before issuing a policy. A pre-existing condition usually doesn't result in outright denial; more commonly, the insurer will issue the policy with an exclusion for that specific condition. For example, if you have a history of back problems, the policy may exclude disabilities related to your back while covering everything else. In some cases, conditions that are well-managed or resolved may not result in any exclusion at all. The earlier in life you apply — while you're healthy — the better your chances of getting a clean policy.

Yes — most individual disability policies do cover mental health conditions such as depression, anxiety, and PTSD if they prevent you from working. However, many policies include a limitation: mental health and substance abuse claims may be limited to 24 months of benefits, while physical disabilities can pay to age 65. This is a policy detail worth understanding before you buy. If mental health coverage is a priority for you, Brad can help identify policies with stronger mental health provisions or fewer restrictions.

Absolutely — and it's arguably even more critical if you're self-employed, because you have no employer-provided safety net at all. There's no sick pay, no group disability plan, and no HR department. If you can't work, the income simply stops. Individual disability policies are available to self-employed individuals, freelancers, and small business owners in Wisconsin. The benefit amount is typically based on your documented net income, so having clean tax returns helps the application process. For business owners, there are also Business Overhead Expense (BOE) policies that cover your business's operating costs — rent, utilities, employee salaries — while you're disabled. Call Brad to discuss the right combination of personal and business disability coverage for your situation.

Employer group disability plans are a good starting point, but they often have important gaps. Group policies typically replace only 50–60% of your base salary and may exclude bonuses or commission income. They use an "any occupation" definition after 24 months, making it harder to keep collecting benefits long-term. Most critically, group disability coverage is tied to your job — if you leave, get laid off, or your employer changes plans, your coverage disappears. An individual policy you own is portable, guaranteed renewable, and tailored to your actual income and occupation. Many people use their employer plan as the base and supplement it with an individual policy to fill the gaps. Brad can review what you have and help you determine if additional coverage makes sense.

As a general rule, individual disability insurance costs between 1% and 3% of your annual income. So if you earn $70,000 per year, you might expect to pay roughly $700–$2,100 per year depending on your age, health, occupation, benefit amount, elimination period, and benefit period. Higher-risk occupations (such as physical labor) typically cost more than lower-risk desk jobs. Because disability insurance is medically underwritten, your health history also plays a role. The best way to know your actual cost is to get a personalized quote — which Brad provides at no charge.

The best time is now — while you're young and healthy. Disability insurance premiums increase with age, so locking in a policy early means lower rates for the life of the policy. More importantly, if you wait and develop a health condition in the meantime, you may face exclusions, higher premiums, or in some cases be unable to qualify at all. Many people put off buying disability insurance until they feel more financially settled, but that's exactly when a disability would be most devastating. If you're currently earning income and would be in financial trouble if that income stopped, you need to look at this coverage today. Brad can walk you through options in about 15 minutes.