Last reviewed October 27, 2026 by Vivek Sharma, licensed Pennsylvania insurance producer (License #719000).
Group disability coverage through an employer is a useful base, but it is designed for a whole workforce, not for you. Individual coverage fills the gaps and goes with you if you leave.
How they compare
| Typical group plan | Typical individual policy | |
|---|---|---|
| Benefit amount | A percentage of salary, often capped at a monthly maximum | Set for you, within the insurer’s limits based on your income |
| Income counted | Often base salary only | Can include bonuses and other earned income, depending on the insurer |
| Definition of disability | Often own-occupation for a limited period, then any-occupation | Own-occupation options available, depending on occupation and insurer |
| Offsets | Usually reduced by Social Security disability and other benefits | Usually not reduced by Social Security disability |
| Taxes | Benefits generally taxable if the employer pays the premium | Benefits generally tax-free if you pay the premium with after-tax dollars |
| Portability | Usually ends when you leave the employer | Yours, regardless of employer |
| Changes | Employer and insurer can change or cancel the plan | Non-cancelable policies can’t be changed or repriced while you pay |
| Underwriting | Often none | Medical and financial underwriting |
| Cost to you | Low or none | You pay the premium |
General comparison only; terms vary by plan and insurer. Review your plan documents for the specifics.
Why high earners often need both
A benefit cap affects high earners most. If a plan pays a percentage of salary up to a monthly maximum, the higher your income, the smaller the share it replaces. Add taxes on employer-paid benefits and offsets for other income, and the real replacement can be far lower than the plan’s headline percentage.
Layering individual coverage on top
Most professionals keep their group coverage and add an individual policy on top. Insurers limit total coverage from all sources to a share of your income, so the amount of individual coverage you can buy depends on what your group plan provides. We review your plan documents and show you the gap.
What to look for in your plan documents
- The benefit percentage and the monthly maximum
- What income counts: base salary only, or bonuses too
- The definition of disability and how long any own-occupation period lasts
- Offsets for Social Security and other income
- Who pays the premium, which affects taxes
- Limits on mental health and substance use conditions
Related: Disability Insurance Guide · Own-occupation explained · How much coverage do you need? · How benefits are taxed · Disability insurance for physicians