Should a Lawyer Have Disability Insurance?

Should a lawyer purchase disability insurance? Most lawyers will be familiar with the answer: it depends. The reason anyone has disability insurance is to protect their income. If a lawyer (and this goes for any occupation, really) is independently wealthy and doesn’t rely on their income to make ends meet, then disability insurance doesn’t make a lot of sense. Another scenario where disability insurance isn’t that useful? If an attorney is still practicing law passed the age of 65. Many, but not all, disability insurance policies cover the insured until age 65, at which time Social Security begins.

Disability Insurance for Lawyers is Less Expensive

Ok, so if you’re not age 65 nor independently wealthy? You definitely should have disability insurance as a lawyer. For starters, because lawyers are in one of the highest occupation classes as determined by the insurance company actuaries, their disability policies have some of the lowest premiums.

The truth is, even if facing the greatest orator in court, the legal profession is a lot less dangerous occupation than, say, a welder or machinist. The actuaries also appreciate the stability of income that’s often found in the legal profession. While a Plaintiff’s attorney might see some fluctuation in income based on the success of their cases, as a whole, lawyers tend to have steady incomes as compared to some other highly-compensated professions, such as realtors.

This all adds up to lawyers being able to purchase disability insurance policies usually at discounts of around 70% as compared to other occupations.

Do Lawyers Become Disabled?

We just mentioned that being an attorney isn’t a dangerous occupation. So do lawyers ever become disabled? The answer is yes. Stress, something most lawyers have a hard time avoiding, can increase your risk for heart disease. Luckily, some disability policies not only pay out your disability benefits after a debilitating heart attack, but after a major heart attack, stroke, or cancer, the policyholder will, in addition to disability payments, receive a lump sum of 6 times their monthly benefit. So if you have a $5,000 policy, you’d also receive a $30,000 lump sum.

The most common health problems lawyers encounter leading to disability claims are: musculoskeletal, back, cardiovascular, and psychological issues. In most states, disability insurance also covers substance abuse disorders.

This is good news for the legal profession, as lawyers are more likely than many other occupations to file disability claims related to mental health and substance abuse issues, as opposed to physical disabilities. According to the American Bar Association, for example, in Massachusetts, these type claims have increased to 40% of attorney disability claims.

What Type of Disability Insurance Should a Lawyer Purchase?

Depending on the type of law an attorney practices, we might recommend true own occupation (own occ) or modified own occ disability insurance. Let’s look at an example:

If an attorney practices litigation, there are scenarios where a true own occ disability insurance policy makes sense. Say the attorney’s practice requires her to argue motions or examine witnesses in court. Inevitably this type of high-leverage work increases the lawyer’s stress levels and heart rate. In the event that attorney has a heart attack, their cardiologist might advise the attorney to no longer make court appearances. The lawyer’s disability does not, however, prevent her from becoming a highly-compensated law school professor. If she has a true own occ disability policy, the lawyer can collect her tax-free disability benefits and collect her salary as a professor at the same time.

Lawyers working as sole practitioners or at smaller firms might benefit from additional types of insurance. For example, they might consider (1) business disability insurance and (2) buy-sell disability insurance. With a business disability insurance plan, the company’s overhead expenses are covered in the event the attorney becomes disabled. A buy-sell disability insurance plan comes into play when one business partner becomes disabled. The plan allows the non-disabled partner to buy out the disabled one.

Free Disability Insurance Quote for Lawyers

Lawyers are one of the top occupations purchasing disability insurance. If you’re interested in purchasing disability insurance or just have questions, don’t hesitate to give us a call. We’re also happy to provide you with a free, no-obligation (and no spam) disability insurance quote.

Learn more about our discounted disability insurance for legal professionals>>

Troy Baccus
Managing Partner

Troy Baccus is a managing partner of Montana Life Group. Troy has an extensive background in retirement strategy design and Social Security optimization thanks to a career working as an annuity case design specialist for one of the most respected annuity distribution firms in the industry. Troy has spent years designing income strategies for some of the top financial advisers around the country. View Troy’s full profile>>