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Is supplemental disability insurance right for me?

Narrow the gap between your actual income and what your group disability plan offers

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Disability insurance through your work is a nice employment perk, but it’s often not enough. Employer-based group plans often have minimum benefit payout amounts, such as 40% of your income for long-term disability plans. And the benefits may even be taxed, further reducing your payout amount. Supplemental disability can bridge the gap between what you need and what your group disability plan offers.

What is supplemental disability insurance?

Supplemental disability is designed to fill in the income gaps between the amount of money you need and what your current disability policy pays out after you file a claim.

Since employer-based group disability insurance plans are typically bought with one thing in mind: offering a plan at the lowest possible cost — your disability benefits are likely lower than what you need to maintain your current lifestyle.

How does supplemental disability insurance work?

Supplemental disability works almost identical to regular disability — it pays out an additional benefit if you experience a covered disability and can’t work. It has the same features as a regular disability policy, such as an elimination period — or waiting period — and a benefit period, which is the length of time you’ll receive money.

Supplemental insurance typically can raise your benefit amount to around 80% of your predisability income for long-term disability plans, and could raise it to 100% on short-term disability plans.

Is supplemental disability insurance worth it?

If your group plan has strict return-to-work requirements and only pays out the minimum amount of disability benefits, such as 40% of your income, it may be worth opting into supplemental disability.

But since you’re essentially paying for two policies, consider buying your own private disability insurance plan. Private disability is still likely to be more expensive than combining an employer-based group disability plan with supplemental, but it will also be more comprehensive and will ensure you have the coverage you want.

How do I get supplemental disability coverage?

Supplemental disability is typically only available to people who have a group disability insurance plan through their employer. You may even be able to purchase it with the same insurer that has your group disability plan, though it won’t be tied to your employer. So if you lose or switch jobs and lose your group disability benefit, you’ll still have your supplemental disability plan.

Pros and cons of supplemental disability insurance

Pros

  • Provides more income. Boost your disability benefit and receive closer to 80% to 100% of your predisability income with supplemental disability insurance.
  • Affordable coverage. Supplemental disability insurance is less expensive than a standalone disability policy, though the exact amount you pay will depend on your plan and current health.
  • You own the policy. You’ll still own your supplemental disability policy even if you switch jobs, and you can use it once you’re under another group disability plan.

Cons

  • You may pay for two policies. Though your group disability plan is likely free or affordable through your employer, you’ll still have to pay for supplemental disability, which means you may end up paying for two disability policies instead of one.
  • Requires primary insurance. If you lose your job, you won’t be able to use your supplemental disability insurance unless you enroll in another group plan. It can’t stand by itself and pay a disability benefit, it requires a primary policy.

Compare disability insurance

Name Product Coverage Amount Benefit period Waiting period Own Occupation Medical exam required Online quote
Policygenius Disability Insurance
$100 to $20,000
2, 5, or 10 years or until age 65 or 67
60 - 365 days
Yes
Depends on provider
Yes
Get matched with one of 15 top life insurance companies to find the best coverage and rates for you.
Breeze
$500 to $20,000
1, 2, 5, or 10 years or until age 65 or 67
30 - 365 days
Yes
No
Yes
This startup offers some of the most riders and benefits backed by an established underwriter.
LeverageRx
$100 to $20,000+
1, 2, 5, or 10 years or until age 65 or 67
30 - 365 days
Yes
Depends on provider
Yes
LeverageRx is a digital lending and insurance marketplace exclusively for medical professionals.
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Compare up to 4 providers

Alternatives to supplemental disability insurance

If you can’t afford or don’t want to buy supplemental disability insurance, you’ll still have options to cover your lost income if you become disabled and can’t work.

  • Private disability insurance. You likely won’t need supplemental disability insurance if you buy short-term or long-term disability insurance through a private insurance company. The benefit amounts can be higher and you can tailor these policies to fit your exact needs and budget.
  • Savings fund. Predicting how much savings you’ll need to live on is impossible since you can’t know how long you’ll be out of work, but an emergency savings fund could get you through a couple of months without work.
  • Help from family and friends. Every little bit helps, so if you have family or friends who are willing to help you out on a short-term basis, then you may be able to squeeze by until you can work again, if your disability is only a few months.
  • Personal loans. A risky option unless your disability won’t last long and you know you can repay the debt once you return to work. But a personal loan could provide the funds to live on for a few months.
  • Social Security Disability insurance. If your disability is expected to last longer than one year, you could apply for SSDI. The approval rate is under 50% and the benefit payout may not be high enough to fully replace your income, but it is an option that you can apply for.

Bottom line

Supplemental disability insurance is a good option if you think your employer-based group disability insurance won’t be enough to replace your income and maintain your current lifestyle. You’ll even be able to take your supplemental disability insurance policy with you if you switch jobs and move to a different group disability insurance plan.

But if you’d rather buy one disability policy through a private insurance company, you can tailor your plan to your exact needs. To get the best rate, compare disability insurance companies to find the best option.

Common questions about supplemental disability insurance

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