Understanding the Cons of Disability Insurance

Shawn Plummer

CEO, The Annuity Expert

What Are The Cons of Disability Insurance?

Disability insurance is a safety net, offering financial support if you cannot work due to illness or injury. However, like any insurance, it’s not without its drawbacks. Knowing these cons helps you make an informed decision about whether disability insurance is right for you.

1. Elimination or Waiting Period

One of the key drawbacks is the elimination or waiting period. This is the time you must wait before your insurance benefits start. It’s crucial to understand that you won’t receive any financial support from your insurance during this period. This period varies and can be challenging if you have no other income sources.

2. Potential of Never Using the Insurance

The nature of insurance is such that you might never need it. If you never become disabled, your premiums don’t translate into direct benefits. It’s a precautionary measure, but not everyone will utilize the benefits, making it seem like an unnecessary expense for some.

3. Limited Income Replacement

Disability insurance typically covers only 60 to 65% of your income. This means you won’t be fully compensated for your lost income. If you’re used to living on your full salary, adjusting to this reduced income can be challenging, especially if you have ongoing financial commitments.

4. Higher Costs for Certain Jobs

The cost of disability insurance can vary significantly based on your profession. Your premiums can be notably higher if you’re in a blue-collar job or high-risk profession. This makes it a more considerable financial commitment for some professions compared to others.

5. Underwriting Based on Reported Income

The coverage you can receive is often based on your reported income to the IRS. If you report a lower income to save on taxes, this can backfire regarding disability insurance. You’ll only be eligible for benefits based on your reported income, not your actual earnings.

Understanding Disability Insurance Cons

DrawbackImpact on Policyholder
Elimination PeriodNo benefits during this time; financial strain
Potential Non-UsePremiums paid without receiving benefits
Limited Income CoverageOnly 60-65% income replaced; lifestyle adjustment
Cost Variation by JobHigher premiums for high-risk professions
Income ReportingBenefits based on reported income, not actual


While disability insurance provides a crucial safety net, understanding its limitations is vital. The waiting period, the possibility of not using the insurance, limited income coverage, varying costs based on occupation, and dependence on reported income are significant factors to consider. Weigh these cons against your personal and financial circumstances to decide if disability insurance suits you. Remember, informed decisions lead to better financial security. Contact us today for a free quote.

Request A Quote

Get help or a quote from a licensed financial professional. This service is free of charge.

Contact Us

Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

Scroll to Top