Disability Insurance for Attorneys: A Plan for The Unexpected Illness or Injury

Disability insurance can protect your family if you suddenly can’t work because of an injury or illness. It’s especially important to buy your own policy if you’re the primary earner for your family and you have dependents.

You might think having your own policy isn’t necessary, because you’re covered through work. Unfortunately, most group policies at law firms have limited income benefits, cover only your salary and are taxed as income. In contrast, a personal policy is one that you own and is portable across employers. A personal policy also tends to have a much stronger definition of disability and coverage.

At least 51 million working adults in the U.S. don’t have disability insurance coverage, including many of our readers and clients who practice law.

Disability insurance is usually more expensive than term life insurance. Therefore, many people mistakenly glaze over its importance. But you’re more likely to become disabled over the course of your career — whether short-term or long-term — than you are to pass away prematurely.

So, let’s look at some key details of disability insurance for attorneys, including what attorneys tend to buy, how much coverage is needed, and where to find affordable rates with sufficient benefits.

Do attorneys need disability insurance?

According to the Social Security Administration, the probability of becoming disabled between age 20 and normal retirement age is 25%. That’s one in every four workers.

So, unless you’re financially independent with plenty of assets, disability insurance should be on your radar as an attorney. And it should be a top priority if you’re responsible for the primary income for your household.

However, if you make about the same income as your spouse or partner, there might be some wiggle room in deciding to forgo additional disability coverage. But this should only be the case if you live below your means or are willing to make some serious adjustments to your lifestyle if you were to lose your income.

Special considerations for lawyers buying disability insurance

Although attorneys don’t rely on their hands to earn a living like a physician does, disability insurance is still important.

Even though you might be able to perform all your work on a computer, conditions such as cancer, severe back pain, and other medical problems could affect your ability to earn an income.

Additionally, your job requires excellent communication skills and deep, analytical thinking. If you were to develop a condition or disease that affects your mental clarity or ability to effectively communicate (e.g. early Alzheimer’s or a stroke), then you would have a level of income protection in place. The same goes for an injury that affects your eyesight or hearing.

Even if you’re able to find other employment with a disability, it’ll be challenging to find a profession that provides you with the same income as your law career.

Bottom line: The main reason a lawyer needs to buy disability insurance is when they earn their family’s primary income. If that’s you, then you need your own policy.

What disability insurance do attorneys currently have?

Our 2022 Student Loan Planner Insurance Survey had more than 1,500 participants, with 92 attorneys responding. Here’s what we learned about their views and experience with disability insurance.

Most attorneys are relying on their employer for disability insurance

A large chunk of our surveyed attorneys (62% to be exact) recognized the need for disability insurance within the profession.

For the most part, those who thought they needed disability coverage followed through by securing it through their employer.

  • 57% have disability coverage through their employer.
  • Only 13% purchased disability insurance outside of work.

The data suggests that most attorneys are relying heavily on limited disability coverage through their employer or don’t have any at all.

Breadwinner lawyers don’t understand the importance of disability coverage

One of the more concerning findings is that breadwinners aren’t realizing how underinsured their families are.

Our survey determined that 63% of responding attorneys were their household’s primary income source. Yet, not even two-thirds of those breadwinners believe they need disability insurance.

You need some level of coverage to protect your family unless you’re willing to dramatically cut back on your lifestyle and rely on Social Security Disability Insurance (SSDI) or family charity. For reference, the average SSDI monthly benefit as of January 2022 was $1,222.75.

Remember, your spouse, partner and children are depending on your income for basic needs and to continue their current lifestyle.

How much disability insurance do attorneys need?

At a minimum, you want a disability benefit that covers your living expenses. But if you can afford more, it’s best to opt for the maximum monthly benefit allowed. This is generally about 60% of your income.

If you already have existing long-term disability coverage through your employer, it’ll likely affect the monthly benefit you’re eligible for when shopping for coverage on your own.

Using the average lawyer salary provided by the Bureau of Labor Statistics, let’s look at an example of a 30-year old attorney earning $126,930 annually who doesn’t have any existing disability coverage.

The ideal disability benefit for this lawyer is $6,200 per month. This maximum benefit will cost:

  • $123 to $167 per month for a 30-year-old male attorney.
  • $203 to $275 per month for a 30-year-old female attorney.

As you can see, gender plays a significant role in determining premium payments for disability insurance. Some companies offer unisex discounts, which is why it’s helpful to get the services of an independent agent.

Additionally, the longer you wait to buy disability coverage, the more expensive it’ll be. So, ideally, you want to get your own disability insurance policy at your youngest and healthiest stage.

Ways to adjust your disability insurance premium

Depending on your budget, you can swap out different policy details to find a more affordable rate.

For example, you can change the waiting period (e.g. 60, 90, 180 or 365 days), which determines how long you must wait from the start of your disability to when you receive your first disability payment. Note that policies generally pay out at the end of the month. Therefore, if you choose a 90-day waiting period, know that you won’t receive the first payment until day 120.

If you’re trying to lower your monthly premium, it might make sense to choose a longer waiting period if you have a solid emergency fund or savings that can safely cover your expenses until your benefit kicks in.

Additionally, you can consider adding or removing different riders that act as add-ons to your disability insurance policy. Here are just a few of the different riders available with disability insurance:

  • Own occupation coverage. Allows you to qualify for disability benefits if you’re still able to work in other occupations outside of being a lawyer. This might be a reasonable rider to forego as an attorney.
  • Residual disability coverage. Pays benefits for partial disabilities that don’t completely prevent you from working.
  • Non-cancelable. Provides a “locked in” product, meaning the insurer can’t cancel your policy or change the rate or benefits as long as you pay your premiums.

There’s also a future increase option that allows you to up your benefit amount when your income increases, even if you’ve had changes to your health status.

These riders can be explained by an expert independent agent.

What disability insurance benefits do attorneys have through work?

The majority of surveyed attorneys reported having some amount of disability coverage through their employer. However, employer group benefits often provide very limited coverage.

For example, benefits may only be available for a narrow window of time via short-term disability insurance. Long-term disability insurance might come with inadequate benefits, such as low income protection or strict definitions of what qualifies as a disability under the policy.

One example group policy that we found only provided $5,000 of income protection and it was taxable. If you’re in Big Law and earn $200,000 a year with a big mortgage, that group coverage is entirely inadequate if you earn most of the family’s household income.

Additionally, your employer might limit calculations to your base pay and ignore additional compensation, such as bonuses.

How much does disability insurance cost for attorneys?

Disability insurance premiums are determined by many factors, including your health, age, gender and policy provisions. Your occupation also matters. Attorneys will generally pay less for disability insurance than say a physician because there are less day-to-day hazards and injury concerns that could put you on the sidelines.

Study’s real cost of disability insurance coverage

Our survey found that responding attorneys pay an average of $73 per month for disability insurance. But premiums ranged from $11 to $111 or more. However, most coverage was provided through an employer, which typically comes with very restricted coverage.

By running cost estimates through different insurance companies, we found a reasonable estimate to be between $125 to $275 per month for attorneys who want adequate disability insurance coverage.

You can consider cutting back on other expenses or choosing a lower level of income protection if these figures are outside of your budget. But keep in mind there are also a number of variables (e.g. waiting period and policy riders) that can be adjusted to find the right policy for your situation.

Note if you pay for the premium, the payout benefit is tax-free. However, if your employer picks up the tab for the premium, then your disability benefit will be counted as taxable income.

Where to find disability insurance for attorneys

If you’re the breadwinner (or if your household greatly depends on your income), disability insurance is too important to skip over.

If you’re a member of an association or professional society, it might be worth looking into what they have to offer for disability insurance.

For instance, the American Bar Association (ABA) offers two group disability insurance plans for its members via a MetLife partnership. Members may apply for coverage up to $6,000 or $12,000 per month, depending on the plan. However, these plans exclude attorneys located in Alaska, Maine, Montana, New Hampshire, New Mexico, Oregon, South Dakota and Washington.

Be aware these group benefit plans are usually lacking in one way or another, whether you’re wanting more coverage or just better benefits in general.

So, it’s important to do some comparison shopping on your own to find the best rate and coverage.

You can receive a free one-on-one assessment of your insurance needs and quickly compare the biggest companies in the disability insurance space by starting the free quote process today using the form below.

Get Your Disability & Term Life Quote

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