Takeaway: Since a massage therapist’s income depends on their body’s ability to work, it makes sense to consider buying short- and/or long-term disability insurance.

As massage therapists, we rely on our bodies to deliver massage. Our incomes depend on bodies that can do the work, and if we are ever unable to provide massage, our financial security is in jeopardy. This is why disability insurance is important for massage therapists to understand.

Disability insurance is insurance that kicks in when you are unable to work, such as when you have an injury, an unexpected disability, or something that inhibits your ability to work and interrupts your income.

Types of Disability Insurance

There are two major types of disability insurance: short-term disability and long-term disability.

Short-term disability is designed to cover a disability or an injury that keeps you from working for a short time. It generally covers disabilities that last 3–6 months. It can be shorter, but in general, it’s designed for injuries with a specific time frame for recovery. An example would be a broken arm. This would take a couple of months to heal and there is an expected point of full recovery.

Long-term disability, by contrast, is designed for issues that keep you from working for much longer than a few months. The average claim or period for long-term disability is 35 months. However, a long-term disability may last a couple years, or it may last a lifetime.

Pros and Cons

As a massage therapist, should you have disability insurance? If so, what kind?

It’s difficult to give general recommendations without knowing more about a specific situation, but let’s cover some concepts that can help you better understand your needs and options. 

Short-Term Disability

The advantage of short-term disability is the immediacy of the benefit. It pays out quickly when you are temporarily injured or unable to work. It often kicks in right away or within a couple of weeks, although some policies can have longer waiting periods.

When you can’t work, it’s nice to have income replacement as soon as possible. For this reason, if you’re evaluating short-term disability insurance policies, you’ll want to be sure to pay attention to the waiting period (often called the “elimination period”) before the policy starts paying you.

What are the downsides of short-term disability? Sometimes it can be expensive. In some cases, it can be as expensive as long-term disability; you’ll want to compare costs. Other disadvantages include low payouts and inconvenient waiting periods, as mentioned earlier.

Long-Term Disability

The biggest benefit of long-term disability insurance is it can pay out when you’re disabled and unable to work for an extended period—which you’ll be grateful for if you experience an injury or disability that keeps you from working and you don’t know when or if you will recover.

While there are many variations and options, many policies replace about 60 percent of your income. You can also get policies that replace more or less than that.

While 60 percent may not sound like much, the way it’s taxed can make a big difference. If your insurance premiums are paid with pre-tax dollars, then your payout benefit will be taxed. However, if your premiums are paid with post-tax dollars, the payout benefit will be tax-free. So, if you need to use the benefit and your payout is tax-free, 60 percent doesn’t seem quite as low.

How do you know if you’re paying premiums pre-tax or post-tax? Generally, if your long-term disability is provided as an employer benefit (such as from a corporate franchise), then it’s being paid with pre-tax dollars. However, if you are paying for the premiums directly, it’s generally going to be with post-tax dollars (which means the payout benefit would be tax-free). Knowing this, it can be to your advantage to pay your long-term disability premiums with after-tax money.

As noted earlier, one downside of long-term disability is the waiting period, otherwise known as the elimination period. This is the length of time before the benefit begins to pay. Waiting periods can vary, but it’s common to see a 90- or 180-day waiting period on many policies. That means if you get injured, you’ll likely have to wait about 3–6 months before your long-term disability income benefit starts paying you. You may be asking, “What am I going to do for income in those 90 days (or more)?” That is indeed something you should be asking and planning for.

Planning for the Unplanned

Supplementing a long-term disability insurance policy with a short-term disability policy is one option for covering all your bases. The short-term disability benefit would cover your immediate income needs during the waiting period and then long-term disability would kick in once the waiting period has passed. 

While this may seem logical on the surface, it can often be more to your advantage to forgo short-term disability insurance and establish a fully funded emergency fund instead. If you constantly pay premiums for short-term disability, you are not building any savings with that money, and if you never use it—the money is gone. But if you instead build up an emergency fund to cover 3–6 months of expenses, you get to keep that money if you never use it. You’re essentially paying yourself the premiums and self-insuring.

So, should you get long-term disability insurance? While that is dependent on your personal situation, here are some facts that may help you determine the risks:

• Every year, 12 percent of the adult US population suffers a long-term disability.

• Approximately 25 percent of American workers become disabled at some point in their careers, and, on average, the disability lasts more than three months.

• At age 35, you have a 50 percent chance of experiencing a disability of three months or longer before age 65. At 45, the figure is 44 percent.

If you feel that disability insurance is right for you, it may make sense to get some quotes and options. As massage therapists, our ability to use our bodies is critical to our income. Protecting that income is important, and disability insurance can help fill the gap in the event of an unexpected interruption. 

Allissa Haines and Michael Reynolds are found at massagebusinessblueprint.com, a member-based community designed to help you attract more clients, make more money, and improve your quality of life.