Is Disability Insurance Necessary if You Have Significant Savings?

Probate is the legal process of validating a will and distributing property after death. Courts supervise the procedure to ensure debts are settled, heirs are identified, and instructions in the will are carried out. If no will exists, state law decides how assets are divided. While probate provides order and oversight, it often creates delays and costs that many families would prefer to avoid.

Many successful professionals and retirees with strong portfolios assume they can “self-insure” against the risk of disability. After all, with ample savings and investments, why pay premiums for coverage you may never use? The answer lies in understanding how fragile even a well-built financial plan can become when income stops unexpectedly. Disability is not rare: government data suggests more than one in four 20-year-olds today will experience a disabling illness or injury before retirement age.

Why Savings Alone May Not Be Enough

High earners often underestimate the true cost of losing an income stream. Consider a professional in their 40s earning $300,000 annually. Over 20 years, that income represents more than $6 million in future earnings, not including raises or bonuses. Even a $2–3 million portfolio can be depleted quickly when it must cover both living expenses and foregone income growth. For families accustomed to a certain lifestyle, savings may erode much faster than anticipated.

The Role of Disability Insurance

Disability insurance functions as income protection. It replaces a portion of earnings if illness or injury prevents work. For high earners, specialized policies can cover a larger share of income, including bonuses or commissions that group policies often exclude. Unlike drawing down investments, benefits from a disability policy preserve savings and retirement accounts for their intended purpose.

Group Policies vs. Individual Coverage

Employer-provided disability insurance is common, but it typically replaces only 60% of base salary, often capped at modest amounts. Executives and entrepreneurs frequently discover that their coverage falls far short of actual needs. Individual disability insurance policies can supplement this gap, offering own-occupation definitions, higher limits, and benefits tailored to lifestyle requirements.

The Psychological Benefit of Protection

Beyond numbers, insurance provides peace of mind. Knowing that income is protected allows families to continue saving for retirement, education, or other goals without abrupt disruption. For many clients, the assurance that their lifestyle and long-term plans remain intact is as valuable as the coverage itself.

Planning with Prudence

Disability insurance is not about doubting one’s financial discipline; it is about recognizing the scale of risk. Wealthy individuals can withstand market downturns, but prolonged disability creates a different kind of strain—one that no portfolio should shoulder alone. Protecting income with insurance ensures that savings remain what they were intended to be: a reserve for future goals, not a backstop for the unexpected.