Disability insurance is often misunderstood, and myths about coverage, cost and eligibility are widespread. To help clarify common misconceptions, insurEye, a Canadian insurance education resource, compiled over 100 myths about disability and other types of insurance. Below are seven of the most common disability insurance myths, rewritten here in clear, practical language so you can make better-informed choices about protecting your income.
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1. MYTH: I do not need disability insurance; the chances of something happening to me are very low.
FACT: Disability is more common than many people realize. For example, statistics suggest a significant portion of people will experience a disabling injury or illness during their working life. There is a commonly cited estimate that a 20-year-old has about a 25% chance of experiencing a disability that affects their ability to work during their career. Because disability replaces income rather than property or a one-time cost, its financial impact can be long lasting. If you insure your home or car, consider why you would forgo protection for your ability to earn an income.
2. MYTH: My insurance at work covers me, so I don’t need additional coverage.
FACT: Employer-provided coverage varies widely. Some workplaces offer group disability insurance or workers’ compensation, but those programs have limits. Workers’ compensation typically applies only to injuries sustained on the job, and many disabilities occur outside the workplace. Some sources indicate that a large majority of disabilities originate outside of workplace incidents. Group disability policies can provide important protection, but they may only cover a portion of your salary, and coverage usually ends when you leave that employer. Understanding the scope and limits of any workplace plan is essential before assuming you don’t need supplemental coverage.
3. MYTH: Workers’ compensation will pay my full income if I become disabled.
FACT: Workers’ compensation is designed to cover workplace injuries and usually offers partial wage replacement plus certain medical and rehabilitation expenses. Not every employer participates in workers’ compensation, and benefits differ by jurisdiction and employer size. Even where it applies, workers’ compensation typically doesn’t replace 100% of prior earnings and may not cover long-term income needs. For many people, workers’ compensation alone won’t be enough to maintain their standard of living if they can’t work for an extended period.
4. MYTH: The more disability policies I buy, the more I can cash in if I’m disabled.
FACT: Disability benefits are usually tied to your income, not to the number of policies you hold. Insurers apply offsets so total benefits do not exceed a percentage of your pre-disability earnings, and policies are designed to replace a reasonable portion of income—commonly 50% to 70%—rather than provide a windfall. Unlike some other insurance types, disability policies are not intended to be “stacked” into unlimited payments. The purpose is income replacement, not creating a new source of income beyond your usual earnings.
5. MYTH: If I have group disability insurance at work, I don’t need an individual disability policy.
FACT: Group disability coverage is valuable, but it has limitations. You need to know the exact terms: how much of your salary it replaces, whether benefits are taxable, what the definition of disability is, and how long benefits will last. Group plans may offer less coverage than you require and typically end when employment terminates. An individual disability insurance policy can provide portability, potentially broader definitions of disability, and more tailored benefit amounts—so it can be an important complement to group coverage.
6. MYTH: Disability insurance pays a one-time lump sum like life insurance.
FACT: Disability insurance usually pays ongoing monthly or periodic benefits to replace lost income while you are unable to work. The intent is to cover everyday expenses, mortgage or rent payments, and other living costs during the disability period. Lump-sum payouts are more typical of critical illness or some specific long-term care products, not standard disability income insurance.
7. MYTH: If I become disabled, my benefits will start right away.
FACT: Many disability policies include an elimination period—the time you must be disabled before benefits begin. Common elimination periods can be 30, 60, 90, or even 120 days, depending on the policy. Insurers also review claims to confirm eligibility, which can add to the time before payments start. Choosing the right elimination period is a balance between monthly premium cost and how long you could cover your expenses without insurance.
These clarified points were adapted from material originally published by InsurEye. For a more comprehensive list, InsurEye compiled a larger collection of insurance myths and explanations.
More about insurance:
- 10 auto insurance myths you should stop believing now
- 15 home insurance myths to stop believing now
- 7 disability insurance myths to stop believing
- How to save on disability insurance