When couples negotiate a prenuptial agreement, they usually focus on what happens if the marriage ends. That makes sense, but it misses another major risk: what if one spouse becomes too sick or injured to work?
That question matters because prenups often depend on future income. If one spouse is expected to provide support, carry a mortgage, or make other financial contributions, a disability can change the entire picture long before divorce ever happens.
Why Disability Is the Risk Most Couples Overlook
Most people think first about life insurance. That is understandable since death is the most obvious threat. But for working-age adults, disability is statistically the more likely event.
According to the Social Security Administration, one in four workers will face an accident or illness during their lifetime that keeps them out of work for one year or longer. A serious illness, accident, or degenerative condition can take someone out of the workforce for an extended period. When that happens, the income the couple expected to rely on may shrink or disappear. If the prenup assumes that income will always be there, the agreement can become much harder to carry out.
Disability Insurance During Marriage
While the couple is still married, private disability insurance is really about protecting the household’s income stream. If the insured spouse cannot work because of illness or injury, the family may suddenly lose the money it depends on for daily life, housing, and long-term planning.
That is why coverage should start with the spouse’s current salary and occupation. The family needs to know what income is actually being protected, not just what sounds good on paper.
Why Employer Group Disability Coverage Is Usually Not Enough
Many people assume workplace disability coverage solves the problem. In practice, it often does not.
Here is why group coverage can fall short:
- It usually disappears if the employee changes jobs or is let go
- It often covers only base salary, not bonuses or commissions
- It may pay benefits only if the insured cannot do any job at all, even minimum wage work
- The benefits can be taxable if the premiums were paid with pre-tax dollars or by the employer
- The waiting period before benefits start can be long enough to create a cash flow problem before any money arrives
The policy the couple thinks they have may not actually protect the income they are counting on.
Why the Definition of Disability Matters
The most important feature of any private disability policy is the definition of disability itself. The strongest, must-have version is usually called own occupation. That means the policy pays if the insured can no longer perform the material and substantial duties of their specific job, even if they could do some other kind of work.
That distinction matters a lot. A surgeon who can no longer operate should not be treated the same as someone who could still teach or work in a lower-paying role. If the definition is too broad, the policy may never pay when it is needed most.
A good private disability insurance policy may also include:
- Benefits for partial disability, if the person can still work part-time or at reduced capacity
- A shorter waiting period, if the couple wants cash flow protection to begin sooner
- Coverage based on actual income, not just a stripped-down salary figure
Private disability insurance is often more affordable than people expect. Depending on age, health, occupation, and policy terms, premiums are commonly around 1% to 3% of annual income. And if premiums are paid with after-tax dollars, the benefits are generally tax-free under current law.
What Changes If Divorce Happens Later
If divorce later becomes the outcome, the disability question needs a fresh look. The purpose shifts. During marriage, the policy protects the household. After divorce, the issue becomes whether there is still a support obligation or other financial duty that needs to be protected, and whether the existing coverage can still do that job.
That means the prenup should not assume the same policy will always work without review. It should say what happens if the divorce happens later, including whether the policy stays in force, gets replaced, or needs to be revisited as part of the divorce settlement.
What the Prenup May Say
A prenup does not need to become an insurance manual. But it may be able to answer a few main questions:
- Should disability coverage be required while the marriage is intact?
- Who pays for the policy?
- How much monthly benefit should be maintained?
- How long should the benefits last?
- What definition of disability should the policy use?
- What proof of coverage should be provided?
- What happens if the policy is lost, changed, or becomes too expensive?
Those are the decisions that matter. If they are left vague, the agreement may not protect either spouse the way they expected.
What to Do If Coverage Cannot Be Obtained
Sometimes disability insurance is not available, or it is available only at a price that makes it impractical. That can happen because of health, occupation, or existing coverage.
If that happens, the couple should still deal with the risk directly. Depending on the situation, that could mean a different asset arrangement, a larger reserve, or in some cases, a Single Premium Immediate Annuity that creates guaranteed monthly income without relying on the spouse’s future ability to work.
The Bottom Line
A prenuptial agreement that only plans for death is only doing half the job. If one spouse’s income is part of the financial picture, disability should be addressed before the agreement is signed. The right coverage can turn a fragile promise into something much more durable.
Jeffrey A. Landers, CDFA®, CDLP® is the Founder and CEO of Hello Monthly Income™, LLC, a specialized nationwide insurance agency that helps divorcing people protect their receipt of alimony and child support payments with life and disability insurance.
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