Amazon Employee Benefits: An Overview of Disability Insurance
As part of Amazon’s corporate benefits, employees working more than 30 hours per week are automatically eligible for both short-term and long-term disability coverage. These plans replace 60% of your eligible salary, up to certain limits, if you become medically unable to work.
It’s an important protection. Studies show that one in four adults over the age of 20 will face a disability at some point in their careers. Without coverage, even a few months without income can be devastating—particularly in high-cost cities like Seattle.
For example, a mid-career employee recovering from surgery could rely on short-term disability to cover expenses such as student loans and rent while out of work. Without that safety net, financial stress would quickly add to the challenges of recovery.
Amazon’s group disability coverage
Amazon’s disability benefits offer straightforward enrollment with no medical underwriting. But there are also key limitations to consider. The policy is not portable if you leave Amazon; the maximum annual benefit is capped at $300,000. Additionally, since the company pays the premiums, any benefits you receive are taxable.
For higher earners, that cap can matter. In practice, group coverage may be sufficient to cover housing and essentials, but it may leave gaps in areas such as childcare or long-term savings.
Amazon’s short-term disability insurance
Short-term coverage provides 60% of pre-tax weekly pay, but it only counts base salary (or hourly wage multiplied by 2,080). RSUs, bonuses, commissions, and overtime aren’t included. There’s also a seven-day elimination period before benefits begin.
For pregnancy-related disabilities, coverage is more generous: birth mothers receive 100% of basic earnings for up to four weeks before delivery and ten weeks after. In this case, the seven-day waiting period still applies, but benefits are paid retroactively from the first day.
Amazon also provides a partial disability benefit if you lose at least 20% of your monthly income due to a medical condition.
Example: An employee returning to work part-time after an injury may use the partial disability benefit to offset the income lost due to the reduced schedule.
Amazon’s long-term disability insurance
If your disability continues beyond 180 days, the long-term plan will take effect. It covers up to $25,000 a month — or $300,000 per year — for a maximum of 24 months. Unlike short-term benefits, long-term coverage does include RSUs in the eligible pay calculation. However, the plan comes with a pre-existing condition exclusion, meaning some medical issues present before coverage began may not be eligible for benefits.
Should you consider individual coverage too?
Relying solely on your employer’s plan can leave gaps. Your ability to earn — sometimes called your “human capital” — is often your most valuable financial asset. For many people, an individual disability insurance (DI) policy provides an extra layer of security.
Individual policies are portable, meaning you take them with you if you change jobs. Tailor these policies to your needs — whether that means choosing “own occupation” protection, adding inflation adjustments, or securing guaranteed renewable terms. And since you pay the premiums yourself, the benefits are generally tax-free — a meaningful advantage when you’re already receiving only 60% of your income.
Of course, these policies come at a cost. Premiums can be expensive, and underwriting means you’ll need to apply while you’re healthy. Still, for many employees, the peace of mind is worth it.
Example: An employee who regularly changed roles across different companies used an individual policy to maintain consistent coverage without tying it to any one employer.
What to look for in an individual policy
If you decide to explore individual disability insurance, the first step is to see how it fits within your broader financial plan. These policies are most valuable when purchased early—while you’re healthy before age 65, since many insurers won’t issue new coverage after that point.
Unlike employer coverage, an individual policy requires underwriting. Expect the insurer to review your medical history, income records, and occupation. Employees in higher-risk professions may find their coverage capped at lower levels or subject to higher premiums. That’s why applying before health issues arise can make a big difference in eligibility and cost.
When comparing policies, look at how long benefits will last—some only cover you for a set number of years, while others continue until retirement age. Pay attention to whether the policy covers on-the-job injuries, and how the elimination and benefit periods align with your emergency savings. For example, if you have three months of living expenses in cash, a shorter elimination period may give you added peace of mind.
The definition of disability also matters. An “own occupation” policy, which pays benefits if you can’t work in your specific field, is often more valuable than the broader “any occupation” definition. You’ll also want to consider add-ons such as inflation protection, especially if you’re younger and likely to hold the policy for decades.
Cost is another factor. A good rule of thumb is to keep annual premiums under 2% of your gross income. Adjusting the benefit amount, elimination period, or coverage length can help fit the policy to your budget without sacrificing protection.
Finally, step back and look at the big picture. Your individual policy should complement the disability coverage you receive through Amazon, filling in gaps like stronger definitions of disability, portability if you leave the company, and non-taxable benefits. It should also align with your emergency fund, recurring expenses (such as housing and loan payments), and long-term financial goals.
Amazon group plan vs. individual disability insurance
| Feature | Amazon Group Plan | Individual Policy |
|---|---|---|
| Portability | Ends if you leave Amazon | You keep it regardless of the employer |
| Benefit Amount | 60% of eligible salary, capped at $300,000/year | Customizable; can cover more of the income |
| Included Pay | Salary (STDI excludes RSUs, bonuses, commissions; LTDI includes RSUs) | Salary + bonuses + commissions, depending on policy |
| Premium Cost | Paid by Amazon | Paid by you (typically ≤ 2% of gross income) |
| Tax Treatment | Benefits taxable (employer-paid) | Benefits are tax-free (self-paid) |
| Underwriting | None required | Medical and financial review required |
| Coverage Length | Up to 24 months (LTDI) | Often to retirement age; some policies extend beyond 65 |
| Definitions of Disability | Generic “any occupation” style | Can be tailored to “own occupation” |
| Custom Features | Limited | Inflation protection, elimination period, benefit period, etc. |
Navigating the world of Amazon corporate benefits and disability insurance policies can feel complex and overwhelming, but it’s an important part of protecting both you and your family’s financial plan. There are several factors to consider when comparing the corporate coverage offered through your Amazon benefits with individual policies available on the open market. Consider meeting with a fiduciary — an advisor like Brighton Jones — before you talk with a salesperson, like an insurance agent, to make sure you’re thinking holistically about what disability insurance coverages you might consider for your plan.
This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.
