Workplace disability insurance premium fell 7 percent in the first half of 2025, the steepest year-over-year decline in recent quarterly readings, according to LIMRA. Total new workplace disability premium hit $2.3 billion through June, down from $2.47 billion in the comparable period of 2024. The drop hit both short-term and long-term disability coverage.

Disability insurance for business owners moved in the opposite direction.

Short-term disability premium fell 5 percent year-to-date through June. Long-term disability fell 9 percent. The second-quarter reading alone was $618 million, up 3 percent against Q2 2024, suggesting the steepest contraction came in the first three months of the year.

For practice owners, partners in multi-owner firms, and the self-employed, the workplace disability decline reads differently than it does for employees inside those plans. They were not inside those plans in the first place, and the shrinking employer-paid coverage clarifies the structural difference between the employee buyer and the owner buyer.

A practice owner shopping for disability insurance for business owners is buying a different product than the workplace disability that just contracted. The owner’s coverage decision starts from a different place because the owner never had an employer-paid policy to begin with.

LIMRA’s quarterly tracking is the industry’s standard view of group workplace benefits. The trade association collects premium and policy data from the carriers writing employer-sponsored disability plans and reports the cumulative totals. The 7 percent first-half decline reverses a multi-year pattern of growth in the workplace disability segment. Full-year 2024 workplace disability premium grew 2 percent overall, with long-term disability up 7 percent and short-term disability down 3 percent. The 2025 reversal is sharper across both lines.

What caused the contraction is not fully documented in the LIMRA release. Several drivers are possible. Employer benefit programs may be tightening under cost pressure. Fewer new employer accounts may be opening in the first half of the year. Carriers may be raising pricing on group renewals at rates employers are declining to accept. The directional signal is what the data conveys.

Workplace disability has historically been one of the more reliable lines in the group benefits market. Through 2018 to 2023, the segment grew at a low-but-positive annual rate, with short-term and long-term disability moving roughly in parallel. The 2025 reversal breaks that pattern, with long-term disability dropping faster than short-term. The split signals that something specific is happening on the LTD side of the line.

Workplace and Individual Disability Are Different Products

Workplace disability insurance is sold through employers to their employees. The premium is paid by the employer, sometimes in whole and sometimes through payroll deduction. The benefit is paid to the employee if they cannot work. The coverage ends when the employee leaves the job.

Individual disability insurance is sold by brokers directly to the buyer. The premium is paid by the individual out of after-tax dollars. The benefit is paid tax-free to the individual if they cannot work. The coverage stays in force as long as the buyer pays the premium, regardless of job changes.

For employees inside an employer-sponsored plan, the workplace disability decline raises a real question about whether their employer’s coverage will continue at current levels. For owners, partners, and the self-employed, the decline is informational rather than personal. They were always responsible for their own coverage.

Owners Buy a Product the Workplace Decline Does Not Affect

The individual disability market, which is the product practice owners buy, grew 2.7 percent in 2025 even as workplace disability fell 7 percent. The two markets move in different directions because they serve different buyers.

A solo dentist or a litigator who owns her own practice has no employer to provide workplace disability coverage. She has to buy the policy herself, in her own name, from a broker, with terms she selects. The premium is hers to pay, the benefit is hers to claim, and the policy is portable through any business transition because it is not tied to an employer relationship.

A multi-owner practice adds another layer. Partners typically buy individual disability coverage for each owner, sometimes with Buy-Sell coverage attached to fund a partnership buyout if any one partner becomes disabled. None of that coverage flows through an employer-sponsored plan. The partnership’s individual policies stay in force regardless of what the workplace disability market does in 2025 or beyond.

The 7 percent workplace decline does change the picture for one specific category of owner-adjacent buyer. A practice owner whose key employees relied on employer-paid disability through the practice may see those employees ask questions as their workplace coverage shrinks. The owner who carries individual disability for herself, but provides workplace disability to her staff through the practice’s group policy, faces a different conversation than she did a year ago.

For most owners reading the LIMRA data, the takeaway is that the individual coverage decision they already made or are still considering is the right structural decision. The workplace decline does not reach them. It does reach the employees they may eventually hire, and the practice’s benefits offering will need to factor in carriers’ tightening posture on workplace lines.

The LIMRA second-half 2025 reading will show whether the first-half contraction is the start of a multi-year trend or a one-period adjustment. For practice owners already inside the individual disability market, neither outcome changes the structural answer. The owner’s coverage is hers regardless of what employer-sponsored coverage does next.