6 Reasons High-Income Professionals Need to Upgrade Their Disability Coverage

By: Nathan Hobaugh and Eric Diaz

For the average working professional, basic group disability coverage through work offers enough protection—typically replacing around 60% of income on a tax-free basis. But for high-income professionals earning $250,000, $500,000, or even millions annually, that coverage barely scratches the surface.

There’s a common misconception that a workplace policy is sufficient. But when your income is far above average, the financial impact of a disability multiplies—and your protection needs to scale accordingly. The risk of becoming unable to work is the same for everyone, but the consequences for high earners are significantly greater. The right coverage makes all the difference.

Here are six key reasons why high-income professionals need more than just group disability insurance:

1. Group Coverage Leaves High Earners Exposed

Even the most generous group disability plans tend to cap benefits at $10,000–$15,000 per month. That level of coverage may work for someone earning under $220,000, but for professionals making $500,000 or more, it falls well short. Actual coverage percentages for high earners can drop below 40%.

Many high-income individuals—consultants, physicians, executives—find themselves significantly underinsured as their income grows. To close this gap, they often turn to individual disability policies and high-limit excess coverage, which can insure up to $100,000 or more in monthly benefits, depending on income.

2. Tax Treatment Can Drastically Change Your Take-Home Benefit

One of the most overlooked aspects of disability insurance is how benefits are taxed. If the employer pays the premium, the benefit is taxable. If the individual pays, it’s tax-free. That difference can amount to tens of thousands in take-home income each year during a claim period.

Unfortunately, many professionals don’t realize how their policies are structured until they go on claim. It’s important to review benefits documents and understand whether premiums are paid by the employer or the employee, so the financial impact of a disability isn’t a surprise.

3. Individual Policies Offer Better Definitions and Valuable Riders

Beyond income replacement, individual policies offer stronger policy definitions and optional riders that group plans often don’t. This is especially important for professionals in specialized fields.

Take an eye surgeon, for example. If they injure their hand and can no longer operate, but are still physically able to teach, a group policy might consider them employable and deny benefits. By contrast, an individual policy with a true “own occupation” definition would recognize the loss of their surgical ability and continue to pay benefits—because they can’t perform their specific job.

Valuable riders available through individual policies include:

• Cost-of-living adjustments (COLA) to increase benefits annually while on claim

• Catastrophic disability benefits that add extra coverage in the event of severe impairment

• Student loan and retirement contribution protection, helping maintain financial goals even during a long-term disability

4. Future Income Riders Help Young Professionals Scale Their Coverage

Disability insurance isn’t just for established professionals—it’s just as essential for those at the beginning of their careers. Many carriers now offer programs that allow medical residents, new attorneys, and other young professionals to qualify for more coverage than their current income would typically support.

With guaranteed purchase options built into the policy, these individuals can increase their coverage as their income grows—without needing to go through medical underwriting again. Locking in medical eligibility early can create long-term protection and flexibility as income rises.

5. High-Limit Policies Can Protect Millions in Earnings

Once income reaches into the millions, standard disability carriers won’t provide adequate coverage. Specialty markets offer high-limit disability insurance that can insure up to $7.5 million per year in income.

These policies are especially useful for hedge fund managers, private equity professionals, top-tier physicians, entertainers, athletes, and business owners with large contracts. Policies typically come with a five-year benefit period, and many also offer a capstone lump-sum payout at the end of the benefit term if the insured remains disabled. That final payment can help restructure finances and provide long-term support.

6. Business Disability Coverage Helps Protect Operations and Partnerships

For business owners, disability insurance isn’t just about protecting personal income—it’s also about protecting the business itself. Several types of business-focused policies are designed to preserve continuity and stability:

• Key person disability insurance, which helps offset the financial loss if a critical team member is unable to work.

• Buy-sell disability insurance, which provides the funds for one partner to buy out another if they become disabled.

• Business overhead expense coverage, which pays ongoing expenses like rent, salaries, and utilities to keep operations running.

These policies are essential for entrepreneurs and small business owners who want to ensure that their company—and their team—can continue functioning even if they’re sidelined.

Final Thoughts

Disability insurance isn’t just about replacing a paycheck—it’s about protecting a lifestyle, a business, and the people who rely on you. Group coverage alone often leaves high-income professionals vulnerable to financial disruption.

Your income is your most valuable asset. Whether you’re early in your career or managing a complex financial portfolio, take the time to assess whether your current disability coverage aligns with your income, responsibilities, and future goals. The right strategy can help you maintain financial stability—no matter what life throws your way.