7 Things Hawaiʻi Families Should Know Before Buying Disability Insurance

If you’re earning a solid living in Hawaiʻi, have family depending on you, or run your own business, one accident or illness could change everything. Disability insurance is one of the smartest ways to protect your income and keep your household afloat during hard times. But not all policies are created equal—and some could leave you exposed just when you need help the most.

Here are 7 things to consider before purchasing a disability insurance policy in Honolulu or anywhere across the islands.

1. What Exactly Is Disability Insurance?

Disability insurance is designed to replace part of your income if you’re unable to work due to illness or injury. While it doesn’t cover medical expenses (that’s what health insurance is for), it does ensure you can pay your bills and take care of your ʻohana while you recover.

Before shopping for a policy, get clear on your “minimum to thrive” number—how much income you’d need monthly to cover essentials if you couldn’t work.

2. Do You Even Need Disability Insurance?

If you rely on your income to support yourself or your family, the answer is almost certainly yes. According to U.S. government data, 1 in 4 people currently in their 20s will become disabled before retirement. For Hawaiʻi residents facing high living costs, losing income even temporarily can be devastating.

3. What’s the Difference Between Short-Term and Long-Term Disability Coverage?

• Short-term disability policies usually last 3–6 months and cover 60%–80% of your income. Payouts begin quickly — often within two weeks — and can be a lifesaver in an emergency.

• Long-term disability policies can last for years, even through retirement, and typically cover 40%–70% of your income. However, it may take several months to receive your first benefit.

Ideally, have an emergency fund for short-term needs, and a long-term policy in place for more extended disruptions.

4. Can You Take Your Coverage With You?

This is where portability comes in. If you’re offered disability insurance through your employer, find out whether you can keep it if you leave your job. Most employer-sponsored plans are non-portable, meaning your coverage ends if your employment does.

If portability matters to you — or if you expect job changes — it might be worth purchasing a private policy that stays with you no matter where you work.

5. What Happens When It’s Time to Renew?

Policies generally come in two flavors:

• Guaranteed renewable policies allow you to keep your coverage but may raise your premiums.

• Non-cancelable policies lock in your premium and benefits as long as you pay on time.

If your budget allows, look for a policy that offers both non-cancelable and guaranteed renewable benefits. And ask whether premiums are waived during a qualified disability — that can make a big difference.

6. Will Your Benefits Keep Up With the Cost of Living?

Inflation in Hawaiʻi is no joke. A cost-of-living adjustment (COLA) rider can help ensure your disability benefits don’t fall behind rising expenses, especially in a high-cost area like Honolulu.

Choose a policy that increases your benefits on a compounding basis, so your financial support grows over time — even after your disability ends.

7. Do You Need a ‘Future Increase’ Rider?

If your income is likely to rise (as it does for many professionals and business owners), this rider is worth considering. A future increase rider allows you to boost your monthly benefit down the road — without having to prove insurability again.

That said, insurers may cap how much you can increase per year, so understand the limits before relying too heavily on this feature.

Need Help Choosing the Right Coverage?

Finding the right disability insurance can feel overwhelming — but you don’t have to figure it out alone. During our Life & Legacy Planning process, we often discuss income protection options with clients, either during your Family Wealth Planning Session or in follow-up review meetings.

If you don’t already work with a trusted insurance agent, we’re happy to recommend someone we trust and help you understand your choices with objective guidance.

Ready to Take the Next Step?

If you’re not yet a client, schedule your Family Wealth Planning Session today. If you’re an existing client and ready to review your plan and insurance coverage, contact us for your Life & Legacy Plan Review.

At the Law Office of Keoni Souza, we help Honolulu and Hawaiʻi families protect what matters most — today and for generations to come.

FAQs

Q: Is disability insurance worth it if I have savings?

A: Emergency savings are important, but most families in Hawaiʻi would struggle to cover long-term income loss without additional support. Disability insurance provides critical backup.

Q: Can I get disability insurance if I’m self-employed?

A: Absolutely! In fact, entrepreneurs and freelancers in Honolulu often have the greatest need for disability insurance because their income isn’t protected by an employer.

Q: Is Social Security disability enough?

A: For most people, no. Social Security disability benefits are limited and difficult to qualify for. Private disability insurance offers more robust, faster protection.

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This article is brought to you by the Law Office of Keoni Souza, a boutique estate planning firm located in Honolulu, Hawaiʻi, proudly serving families on Oʻahu and across the Hawaiian Islands. At our firm, estate planning is about more than documents — it’s about creating lasting peace of mind for you and the people you love. Through our unique Life & Legacy Planning Process, we guide you to make informed, empowered decisions that protect your wealth, your wishes, and your family’s future. To get started, contact our Honolulu office today to schedule your Family Wealth Planning Session. Mention this article to learn how you can receive this $750 session at no charge.

Disclaimer: The information on this website is for informational purposes only and should not be considered legal advice. For guidance tailored to your specific situation, please consult an estate planning attorney licensed in the State of Hawaiʻi. Use of this website or communication through this site does not create an attorney-client relationship with the Law Office of Keoni Souza, LLC.