Why Disability Insurance Matters in BigLaw

Many BigLaw firms provide disability insurance as part of their benefits package, but is it enough? High-earning attorneys often find that standard employer-provided coverage falls short in several ways, especially when factoring in taxes and benefit caps.

Your ability to earn a high salary is your greatest financial asset, and protecting it should be a key part of your financial plan. Here’s what you need to know about disability insurance as a BigLaw attorney.

Yes, You May Become “Disabled”

Much of the pushback we hear from BigLaw attorneys is that they do not participate in activities that have any reasonable chance of serious injury. When they hear “disability”, they think of a gruesome accident, for example. However, the reality is that most “disability” claims are the result of serious illness or dieases, and health issues do not care what type of work or activities you are engaged in. You are just as “at-risk” as anybody else, regardless of your occupation.

Employer-Provided Disability Insurance: The Gaps

Most law firms offer a group disability insurance plan covering 60% of your gross salary if you become unable to work. But here’s what many attorneys overlook:

Benefits are often taxable – If your firm pays the insurance premiums, any benefits you receive are considered taxable income. This means your actual take-home replacement rate could be closer to 40%-50% of your salary.

The exception to this is when you are an Equity Partner and are paying the full cost of your premiums yourself, or if you are an Associate with the option to pay the premiums after-tax and elect that option.
Benefit caps can reduce coverage – Many policies have a monthly cap (e.g., $10K, $15K, or $25K). If your salary exceeds $200K, and yours probably is, you could be capped out well below 60% of your income depending on the policy’s monthly limit.
Bonuses and equity partner income may not be covered – Group policies often exclude bonuses, profit distributions, and equity partner draws, meaning your total income protection is even lower.

Should You Get Supplemental Disability Insurance?

If you rely on a high income to support your lifestyle, savings goals, or family, a supplemental individual disability policy may be worth considering.

Individual policies offer higher benefit amounts – You can purchase additional coverage to replace more of your income.
Benefits are tax-free if you pay the premiums – Unlike employer-paid policies, benefits from a personally owned policy are not taxed when you receive them.
Stronger definition of “disability” – Individual policies often include “own occupation” coverage, meaning you qualify for benefits if you can’t work as an attorney—even if you could technically do another job.

Key Considerations for BigLaw Attorneys

How much coverage do you actually need? – If you already have significant liquidity, you might need less coverage. But if you have debts, live in a high cost of living area, and/or family obligations, replacing 65-70% of your gross income is often a good target.
Are you planning to make partner? – Partners may have different coverage needs, as they often receive income in the form of draws rather than a fixed salary. Some firms require partners to participate in firm-sponsored whole life or disability plans—know your options.
Do you have employer exclusions? – Read the fine print of your firm’s disability policy. Some plans have waiting periods before benefits kick in, limitations on mental health claims, or strict definitions of disability that could affect your ability to collect.

The Bottom Line: Protecting Your Income Is Non-Negotiable

BigLaw attorneys rely on their ability to work at a high level—losing that ability without sufficient protection could be financially devastating. Understanding your employer’s coverage and supplementing it if needed ensures that your financial plan remains intact, no matter what happens.

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