Disability insurance 101: Get the basics on income protection

Young woman reading about disaiblity insurance.

Disability insurance. It’s not as scary as it may sound. Especially when you realize what it protects if you become too sick or hurt to work and can no longer earn your income or paycheck.

Learn more about what it is, and why it’s a smart investment in the life you’ve worked hard to build.

What is disability insurance?

Think of it as insurance for your income. Just like car insurance or homeowner’s insurance helps you financially when something unexpected happens, so does disability insurance.

It may sound too good to be true, but disability insurance covers you when you can’t work due to an accident or illness. In fact, people who get sick and can’t work are more likely to use disability insurance.

Whatever the reason, it ensures you’ll continue to have an income—whether you need it for weeks, months, or years.

Why do I need it?

You may be a lucky employee that gets some disability coverage through work. But what most don’t realize is that employer-provided policies typically only cover a percentage of your income (typically around 60%). Factor in taxes, and that percentage gets lower.

An individual disability insurance policy can supplement the coverage you already have, or work as a stand-alone policy if you don’t have coverage through your employer. It helps you keep your standard of living, so you may not have to pull from savings or find new sources of income.

Another benefit? Individual disability policies stay with you, even if you change jobs or careers. You can also customize your coverage to your needs and budget.

How much does it cost?

Of course, every policy is different, but the cost of disability insurance is usually around 1–3% of your annual income.1

If you think about it, that’s roughly the cost of a monthly date night or cable bill. It’s a relatively small expense that comes with big peace of mind.

Have an account with Principal®?

Access it online to see investments, coverage, and more.

How much income protection do you need?

Get personalized coverage options with this easy-to-use calculator.

1 Disability income insurance calculations are based on a variety of factors. Disability income insurance also has limitations and exclusions. For specific costs and complete details of coverage, contact your financial representative.