We tend to plan for the things we can see coming: vacations, weddings, buying a home, and saving for retirement. But what about the things we don’t see coming? A sudden illness. A disabling injury. The unexpected loss of a loved one. These are the moments that don’t make it onto vision boards, but they’re just as important to prepare for.
That’s where life and disability insurance come in. While not always the most exciting topic, these benefits are quietly powerful. They provide a financial lifeline when you or your family need it most, and they’re often one of the most overlooked parts of a personal financial plan.
Let’s talk about why these protections matter, and what you should consider when deciding how much coverage you really need.
Life Insurance: Protecting the People You Love
Think of life insurance as a promise. It’s a commitment to your loved ones that if the worst happens, they won’t have to navigate financial hardship on top of emotional loss. Life insurance helps cover funeral expenses, pay off remaining debts, and replace lost income. More importantly, it gives your family time, time to grieve, adjust, and rebuild without rushing into tough financial decisions.
Even if you’re young, healthy, and just starting out, life insurance is still worth considering. In fact, the earlier you buy it, the more affordable it tends to be. And if you have dependents, children, a partner, or aging parents, it’s not just a good idea. It’s essential.
Disability Insurance: Your Income, Protected
Now imagine you’re unable to work for months, or even years, due to an illness or injury. Could you keep up with your rent or mortgage? What about groceries, utilities, or childcare?
Disability insurance is designed for this exact situation. It replaces a portion of your income if you’re unable to work due to a health condition. For many people, it’s the only thing standing between them and a serious financial crisis during recovery.
Yet, it’s often underestimated. Most people think “it won’t happen to me.” But according to the Social Security Administration, more than 1 in 4 of today’s 20-year-olds will become disabled before reaching retirement age. The truth is, disability can happen to anyone, and when it does, your paycheck doesn’t keep coming unless you’re protected.
How Much Coverage Do You Really Need?
Having insurance is a great first step, but having the right amount of insurance is where the real value lies. Start by looking at your financial obligations. Think about everything you’d need to continue covering if your income stopped tomorrow: your home, your car, your family’s day-to-day living expenses. If you have children, add in the cost of education or childcare.
Next, think long-term. If something were to happen to you, would your partner be able to stay in the home? Would your family be able to maintain their current lifestyle or save for the future?
You should also take a close look at what your employer offers. Many companies provide group life and disability insurance, but these plans often fall short. A basic life policy might only cover one or two times your annual salary, not nearly enough if you’re looking to replace income over time or cover a mortgage. Group disability benefits often replace just 50–60% of your income, and in some cases, they’re taxable.
That’s why supplemental coverage can be a smart move. It helps fill in the gaps and gives you the peace of mind that your plan actually matches your needs.
When Is the Right Time to Add Coverage?
Short answer: before you need it.
The best time to secure life or disability insurance is when you’re young, healthy, and financially stable. Premiums are typically lower, and you’re more likely to qualify for better coverage. Waiting until you have a health condition, or after you’ve already experienced a disabling event, can limit your options or make coverage unaffordable.
If you’re going through a major life event, like getting married, buying a home, or having children, it’s also a great time to reassess your coverage. What made sense when you were single and renting might not be enough when other people rely on you.
What to Consider When Choosing or Increasing Coverage
Choosing insurance isn’t just about picking a number and calling it a day. It’s about aligning your coverage with your real life. Here are a few key things to keep in mind:
- Income replacement: Aim to replace enough of your income to support your household for several years, especially if you’re the primary earner.
- Debt and expenses: Consider any large financial obligations, mortgages, loans, and childcare costs that your family would still face without your income.
- Lifestyle: Don’t just think about surviving, think about sustaining the lifestyle you and your family have built.
- Health and insurability: Your health impacts your rates and eligibility. The longer you wait, the more expensive coverage may become.
- Tax implications: Some group policies have taxable benefits. Be sure you understand how payouts will be treated.
Working with a financial advisor or benefits counselor can help you determine how much you need and which type of policy is best for you.
Final Thoughts: Give Yourself (and Your Loved Ones) Peace of Mind
There’s a quiet kind of confidence that comes with knowing you’re protected. Life and disability insurance won’t stop the unexpected from happening, but they can make all the difference in how you and your loved ones get through it.
When tragedy strikes or illness sidelines you, insurance turns chaos into stability. It’s not just a policy, it’s a plan. A plan for care, security, and peace of mind.
So if you haven’t reviewed your coverage lately, take this as your sign. Life doesn’t wait, and neither should your protection.