A Tale of Two Products: DI Buyers Choose Security

October 2025

The U.S. disability insurance (DI) market continues to evolve, shaped by shifting demographics, economic conditions, and growing awareness of income protection. LIMRA’s 2024 Disability Insurance Deep Dive Report offers a comprehensive look into the state of the industry, revealing interesting trends in product preferences, distribution channels, and consumer behavior.

Market Overview

In 2024, the individual DI market saw $491 million in annualized premium, a slight decline from the record-setting $507 million in 2023. Despite this dip, the market remains robust, with noncancelable products accounting for 83 percent of total sales. These products offer long-term security, making them a preferred choice for consumers seeking reliable income protection.

A Tale of Two Products

Noncancelable and guaranteed renewable (GR) products represent the two primary types of individual DI coverage, and their performance in 2024 reveals important insights.

• Noncancelable Sales: These policies, which guarantee both renewability and competitive premium rates, continue to dominate the market. In 2024, noncancelable products generated $408 million in annualized premium, down slightly from $416 million in 2023. Despite the dip, noncancelable policies remain the backbone of the DI market, driven by their appeal to higher-income professionals seeking long-term stability. Policy counts also rose modestly, indicating continued consumer confidence in this product type.
• GR Sales: GR products, which allow insurers to adjust premiums by class but not cancel coverage, saw a more notable decline. Premiums dropped from $91 million in 2023 to $83 million in 2024, a 9 percent decrease. This decline was largely attributed to one major carrier returning to normal sales levels after a record year. GR products are often targeted at the middle market and workplace sales, which may have been affected by economic fluctuations and employment trends.

Who’s Buying and Why

Noncancelable products dominate premium as carriers and agents selling them target professional occupation classes. In fact, more than half of all DI premium is sold to insureds in medical occupations.

Age also plays a pivotal role in DI purchasing behavior. People age 25–34 buy the most policies, while the 35–44 age group contributes the most to premium volume. Income increases with experience, and older buyers generally have higher salaries to insure, leading to higher premiums for this group.

Although many younger individuals say they do not need disability insurance, many companies focus on providing materials for advisors to educate consumers — ensuring that younger individuals understand what disability insurance is, the benefits of having it, and the long-term advantages of purchasing it at a younger age, when premiums are lower and individuals are typically healthier.

Product Preferences: Elimination Periods

One of the most telling indicators of consumer behavior is the choice of elimination period — the time between the onset of disability and when benefits begin. The 90-day elimination period remains the most popular, balancing affordability with timely benefit access.

Sixty-nine percent of premium sales and 54 percent of policy sales fall under the 90-day category. The 180-day period follows, favored by those with savings or short-term disability coverage. These choices reflect a strategic approach to balancing cost and coverage.

Mental Health and Claims Trends

In recent years, mental health awareness has gained significant traction, breaking long-held stigmas. As conversations around depression, anxiety, and other mental health challenges become more accepted, the need for support, education, and resources becomes more of a priority. Historically, companies have put limitations on mental health claims. Despite increased acceptance of mental health issues and broader coverage availability, only 8 percent of companies reported receiving more requests to quote unlimited mental health coverage. This disconnect suggests that while awareness is rising, product offerings and consumer demand have yet to align fully.

While quote requests are not increasing, mental/nervous system disorders now top the list of individual disability insurance claims, followed by musculoskeletal issues and neoplasms/cancer. This shift highlights the need for carriers to reassess underwriting practices and rider options to better support mental health coverage.

Distribution Dynamics

For many years, carriers have struggled to expand their DI distribution networks. Independent agents continue to dominate the DI landscape, holding 55 to 58 percent of market share over the past five years. Career/captive agents trail slightly behind, maintaining a consistent presence in the low 40 percent range. Little to no individual disability insurance is sold directly to consumers, underscoring the importance of agent relationships and personalized advisory services in DI sales.

Despite the importance of DI, advisor engagement remains low. Ninety-five percent of advisors sell 10 or fewer policies annually, indicating a significant gap in market penetration. Carriers are responding by streamlining underwriting, enhancing administrative processes, and revisiting compensation structures to incentivize sales.

Looking Ahead: Optimism and Uncertainty

While 50 percent of companies anticipate significant growth in 2025, 66 percent expect the industry to remain flat. This divergence in outlook suggests that while individual companies are investing in innovation and outreach, broader market challenges persist.

Conclusion

The 2024 DI market reflects both resilience and opportunity. With strong agent channels, targeted educational efforts, and evolving product preferences, the industry is well positioned to grow — especially if it can bridge the gap between consumer needs and advisor engagement. As mental health claims rise and younger buyers enter the market, carriers must adapt to meet changing expectations and deliver meaningful protection.

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A Tale of Two Products: DI Buyers Choose Security

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