If you crunch the numbers, you’ll find that disability insurance for accountants makes sense. During a period of disability, avoiding financial disaster can be impossible, no matter how skilled you are at accounting. Disability insurance provides critical paycheck protection.

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The Job Outlook for Accountants

  • Accounting is a fairly stable industry. After all, businesses and individuals need help managing their finances, which means accountants will always be in demand. The U.S. Bureau of Labor Statistics (BLS) says there were 1,449,800 accounting and auditor jobs in 2021. Between 2021 and 2031, the BLS predicts another 81,800 jobs will be created.
  • Accountants need to pay attention to their own finances as well those of their clients. The BLS says the median annual pay for accountants and auditors was $77,250 in 2021. That’s a respectable salary – but what if a disability prevents an accountant from continuing to earn a paycheck?

The Social Security Administration (SSA) says approximately one in four of today’s 20-year-olds will experience a disability before turning 67. Disability is a serious risk; disability insurance provides important protection against its financial impact.

Protecting the Cash Flow

Accountants understand the importance of cash flow: if you have more money going out than coming in, you have a problem. Unfortunately, that’s exactly the situation many people find themselves in after an injury or illness.

Imagine Steven is earning a good income as an accountant. He has student loan debt, but he’s able to make his monthly payments without any problem. He buys a house. Although he has monthly mortgage payments, these are nothing his paycheck can’t cover. He’s even putting some money aside.

Then he suffers a stroke. Accounting work requires mental concentration that he simply doesn’t have right now. His doctor says he needs to focus on his recovery and take it easy. He can’t work, which means he can’t earn a paycheck. However, his bills don’t stop – he doesn’t have money coming in, but he still has money going out. He runs through his savings in a matter of months.

The only way to solve his problems is to find another source of income. However, Steven doesn’t qualify for workers’ compensation because his disability is not work-related. Furthermore, his Social Security Disability Insurance application has been denied (the SSA says 67% of applications are denied). Steven wishes he had purchased disability insurance.

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Disability Insurance Options for Accountants

Accountants have several options for disability insurance, including:

  • Group short-term disability insurance provides benefits to cover temporary disabilities and health conditions, such as pregnancy. Short-term coverage is not suitable for longer-lasting disabilities.
  • Group long-term disability insurance provides benefits to cover longer disabilities. The benefit period is typically two years or longer. Coverage may be affordable, but it lacks flexibility and portability.
  • Individuals can purchase their own individual disability insurance. This provides portable coverage, and applicants can choose the terms that meet their needs. The benefit period varies, but it can be until retirement age.
  • Guaranteed standard issue disability insurance is available to groups of individuals with the same employer. Policyholders benefit from streamlined underwriting as well as multi-life discounts.

To secure adequate coverage, accountants may want to layer their coverage. For example, if their employer offers group short- and long-term disability insurance benefits at a good price, they can accept both and then purchase individual disability insurance to supplement their coverage.

Many Accountants Are Also Business Owners

Although some accountants work for companies in a traditional employment relationship, other accountants are self-employed business owners. This has several critical implications for disability insurance.

Firstly, self-employed accountants likely lack access to traditional employee benefits. For example, workers classified as employees often have a benefits package that includes health, life, and disability insurance, but workers classified as independent contractors do not. When accountants lack access to group disability insurance benefits, securing individual disability insurance becomes even more important.

Secondly, some accountants own their firms and may employ others. As a result, they don’t just need to think about their own disability insurance needs – they also need to think about the needs of their business and the people who work there.

Some common coverage types to consider include:
  • Business overhead expense insurance. This provides benefits to help with common business expenses when the owner is experiencing disability. It can prevent the business from going bankrupt when the owner can no longer generate revenue.
  • Disability buy–sell insurance. This can fund a disability buy–sell agreement. It can be a good option for partners who co-own an accounting firm.
  • Guaranteed standard issue disability insurance. This is a good way to cover multiple people at once. For example, if a firm has three partners and two assistants, they can all receive coverage and enjoy simplified underwriting and a multi-life discount.

Comparing Options for Disability Insurance for Accountants

When comparing disability insurance options, you have a lot to consider. As the options you choose will impact the premium cost, it’s important to consider your budget – something accountants should have no trouble with.

  • Definition of Disability: The two most common definitions are own-occupation and any-occupation. Own-occupation policies pay if a disability prevents you from fulfilling the duties of your regular job. It tends to cost more. Any-occupation policies pay if a disability prevents you from fulfilling the duties of any suitable job.
  • Benefits: The monthly benefits are a portion of your regular income. They may be subject to monthly caps. Various riders can add additional benefits, such as cost-of-living adjustments, retirement contributions, and student loan repayments, but they can also add to the overall cost.
  • Elimination Period: This is how long you have to wait before you can start receiving monthly benefits. Accepting a longer elimination period can bring down your total premium costs.
  • Benefit Period: This is the maximum period of time you can continue receiving benefits, assuming you still qualify. If you want to avoid a situation in which your benefits run out when you are still unable work, consider a benefit period that only ends once you reach retirement age.
  • Taxes: Group benefits are typically subject to income tax, but individual disability insurance benefits usually aren’t. This can have a big impact on the proportion of your benefits you can actually spend.
  • Portability: Group policies are typically tied to the policyholder’s job, but individual disability insurance policies are portable. This means you don’t have to worry about losing your benefits when you switch jobs and potentially not qualifying for good coverage anymore.
Do You Need Disability Insurance for Accountants?

An insurance agent can help you compare your policy options and buy disability insurance coverage that meets your needs. Find an agent.

Are You an Insurance Agent?

Make sure your clients secure the right coverage for their needs. DIS can help. Get a quote.

The following resources can help you sell disability insurance to accountants.