The Steward's Desk · Insurance and protection
Your income funds everything else in your plan. Here's how to check whether it's actually protected.
Jesse Plunkett, CEPA®, CRPC®
July 12, 2026 · Meet your advisor · 
Because your income is the engine for everything else. Retirement contributions, the mortgage, college savings, and the investment plan all assume the paychecks keep coming. A long illness or injury interrupts that engine, and savings built over many years can drain in a fraction of the time it took to build them.
For someone mid-career, the paychecks still ahead are usually worth more than the house and the portfolio combined. We insure the house without a second thought and often leave the larger asset unexamined, mostly because a benefits packet once said "long-term disability included" and that felt like the end of it.
None of this calls for alarm. Coverage is a checkable, fixable item, and checking it usually takes one afternoon with your benefits documents. The point of this article is to show you what to look for.
Group long-term disability replaces a percentage of your base salary, up to a monthly cap. Bonuses, commissions, and equity compensation usually don't count, and if your employer pays the premium, the benefit is generally taxable. For a high earner, the check that arrives can be a fraction of the take-home pay it replaces.
The percentage is usually 60%. Bureau of Labor Statistics National Compensation Survey data has long put the median group long-term disability benefit at 60% of pre-disability earnings, with about 64% of covered private-industry workers in plans set at exactly that level. The cap is just as standard: roughly 88% of long-term plans impose a maximum monthly payout, and the BLS median maximum was $8,000 a month. Do the arithmetic on that ceiling. A 60% formula only delivers 60% up to $160,000 of salary; above that, the cap takes over and your effective replacement rate falls with every additional dollar you earn.
Each of those clauses cuts the same direction. The percentage applies to base salary only, so the more of your pay that arrives as bonus or equity, the smaller the covered share becomes. The monthly cap bites hardest at the highest incomes. And a taxable benefit shrinks again on the way to your checking account.
One more feature is easy to miss: group coverage belongs to the job, not to you. Change employers and the policy usually stays behind, along with whatever health history you've accumulated since the last time anyone underwrote you.
They define when a policy pays. Own-occupation coverage pays if you can no longer do your specific job. Any-occupation coverage pays only if you can't do any job that reasonably fits your education and experience. The distance between those two definitions is where high earners get surprised.
A surgeon with a hand injury is the classic example: under an own-occupation definition she's disabled, while under an any-occupation definition she may not be, since she could still teach or consult. Many group plans start with an own-occupation definition and switch to any-occupation after an initial period, so the plan document deserves a careful read, not a skim.
This one is personal for me. My wife, Karli, is an aesthetic injector, and her training as a Physician Associate means she could technically fill plenty of roles that do not depend on the steadiness of her hands. On paper, an any-occupation policy might call her employable after a hand injury. In practice, those other roles would likely pay a good deal less than the career she trained for and built, and they are not what she wants to do. That gap, between "could be employed somewhere" and "could keep doing the job that funds our life," is exactly why we carry an own-occupation policy for her.
| Group coverage through work | Individual policy you own | |
|---|---|---|
| What it replaces | A percentage of base salary, up to a monthly cap. Variable pay is usually excluded. | An amount you choose at application, sized against your full documented income. |
| Taxes on the benefit | Generally taxable when the employer pays premiums with pre-tax dollars. | Generally tax-free when you pay premiums with after-tax dollars. |
| Definition of disability | Often own-occupation at first, then any-occupation after an initial period. The plan document controls. | You choose the definition when you buy, and own-occupation coverage is available. |
| If you change jobs | Coverage usually ends when the employment does. | Stays with you for as long as you pay the premiums. |
| Often the better fit when | Your essential spending could run on the capped, possibly taxed benefit, and your savings run deep. | Your lifestyle depends on your full income, your pay leans on bonus or equity, or your career is specialized. |
Start by reading your plan document for four things: the replacement percentage, the monthly cap, the tax treatment, and the definition of disability. Then compare the after-tax benefit to what your household actually spends. If there's a shortfall, an individual supplemental policy can cover it, and buying while healthy keeps that option open.
This review is part of the protection conversation in every plan I build, right alongside life insurance and an emergency reserve. When insurance is the right tool, I can put it in place as part of your plan and may earn a commission on a policy. I'll always tell you when that's the case.
Bring your benefits summary to a short call and we can read it together. That's a normal first project to do together.
Savings measured in months don't match a risk measured in years. An emergency fund handles short gaps; a long disability can run for years while household costs continue. Insurance transfers the part of the risk your savings can't absorb, and it leaves those savings pointed at retirement instead.
It depends on who paid the premiums and with what dollars. Benefits from coverage your employer pays for are generally taxable income. Benefits from a policy you pay for with after-tax dollars are generally tax-free. That difference changes how much benefit you actually need, so it belongs in the math early.
Social Security Disability Insurance exists, but it uses a strict definition of disability, the application process is long, and the benefit is modest next to a high earner's income. It's a backstop worth knowing about rather than a plan. I treat it as a possible supplement, never the foundation.
While you're healthy and your income is well documented. Individual policies are medically underwritten, so a new diagnosis can raise the price or limit what's available. Locking in coverage at a younger age also keeps premiums lower. A recent jump in income is usually the natural trigger to review.