Why Most Software Salespeople Are Underinsured

Most software salespeople are underinsured. They have health insurance through their employer, but they don't have disability insurance, adequate life insurance, or proper downside protection.

This is a huge blind spot. Sales income is volatile. Commission checks are unpredictable. And when something goes wrong — illness, injury, or death — the financial impact is devastating.

Here's why software salespeople need more insurance than most people — and what to do about it.

Why Income Risk > Market Risk for Sales

For software salespeople, income risk is greater than market risk.

Market risk: Your investments might lose value. This is manageable with diversification and time.

Income risk: You might lose your ability to earn income. This is devastating and immediate.

Why income risk matters more: If you lose your ability to earn income, you can't pay bills, save, or invest. Your financial life collapses immediately.

Sales-specific risks: Salespeople face unique income risks:

Illness or injury (can't work)
Burnout (can't perform)
Market downturns (reduced opportunities)
Job loss (harder to replace commission income)

The solution: Insurance protects against income risk. It's downside protection, not fear.

Disability insurance is the most important insurance most salespeople don't have.

What it covers: If you become disabled and can't work, disability insurance replaces a portion of your income.

Why you need it: If you can't work, you can't earn commission. Your income drops to zero (or just base salary). Disability insurance protects against this.

How much you need: Enough to cover your expenses if you can't work. Typically 60-70% of your income.

Types of disability insurance:

Short-term disability (covers first 3-6 months)
Long-term disability (covers beyond 6 months)
Own-occupation (covers if you can't do your specific job)
Any-occupation (covers if you can't do any job)

Why it's a blind spot: Most people don't think about disability. They assume it won't happen to them. But disability is more common than you think.

The cost: Disability insurance costs 1-3% of your income. It's worth it for the protection.

Life Insurance When Income Is Volatile

Life insurance is important, but it's especially important when income is volatile.

Why you need it: If you die, life insurance provides for your family. It replaces your income and covers expenses.

How much you need: Enough to replace your income and cover expenses. Typically 10-15x your annual income, or enough to cover debts, expenses, and future needs.

Types of life insurance:

Term life (covers a specific period, typically 20-30 years)
Whole life (covers your entire life, builds cash value)
For most people, term life is sufficient

Why volatility matters: When income is volatile, it's harder to determine how much you need. Base it on your base salary plus average commission, not just OTE.

The cost: Term life insurance is relatively inexpensive. A 30-year term policy for $1 million might cost $50-100 per month.

Why Commission Earners Have Asymmetric Downside Risk

Commission earners have asymmetric downside risk — the downside is much worse than the upside.

The upside: You might exceed quota and earn more than OTE. This is great, but it's optional.

The downside: You might get sick, injured, or die. This is devastating and immediate.

Why it's asymmetric: The downside risk (losing ability to earn income) is much worse than the upside potential (earning more commission).

The solution: Insurance protects against downside risk. It's downside protection, not fear.

The mindset: Think of insurance as protecting your ability to earn income, not just protecting against specific events.

What Happens to Pipeline When You Get Sick

When you get sick, your pipeline doesn't wait. Deals stall. Opportunities disappear. Income drops.

The problem: If you can't work for 3-6 months, your pipeline dries up. When you come back, you're starting from scratch.

The financial impact: Lost commission, reduced income, and the time it takes to rebuild pipeline. This can take 6-12 months or more.

The solution: Disability insurance replaces income while you're out. It gives you time to recover without financial stress.

Why it matters: Financial stress makes recovery harder. Disability insurance reduces stress and allows you to focus on recovery.

How to Think About Insurance as Downside Protection

Think of insurance as downside protection, not fear.

Downside protection: Insurance protects against worst-case scenarios. It's not about fear — it's about protection.

The mindset: You're not buying insurance because you're afraid. You're buying it because you're protecting your ability to earn income.

The cost: Insurance costs money, but the cost of not having it is much higher.

The balance: Balance insurance costs with protection. Don't over-insure, but don't under-insure either.

What Insurance You Need

Here's what insurance software salespeople need:

Health insurance: Essential. Usually provided by employer, but make sure coverage is adequate.

Disability insurance: Critical. Protects against loss of income due to illness or injury. Get own-occupation if possible.

Life insurance: Important if you have dependents. Term life is usually sufficient. Base coverage on base salary plus average commission.

Umbrella insurance: Consider if you have significant assets. Provides additional liability protection.

What you might not need:

Whole life insurance (usually too expensive)
Accidental death insurance (usually redundant)
Cancer insurance (usually redundant if you have health insurance)

How to Get Insurance

Here's how to get insurance:

Through employer: Check what your employer offers. Many employers provide basic disability and life insurance, but it might not be enough.

Individually: Buy your own policies. This gives you more control and portability.

Through professional associations: Some professional associations offer group insurance at discounted rates.

Work with an insurance broker: An insurance broker can help you compare options and find the best coverage.

Compare quotes: Get quotes from multiple providers. Compare coverage, cost, and terms.

The Cost of Insurance

Here's what insurance typically costs:

Disability insurance: 1-3% of your income. For someone making $150,000, that's $1,500-$4,500 per year.

Life insurance (term): $50-100 per month for $1 million in coverage, depending on age and health.

Health insurance: Usually provided by employer, but you might pay premiums.

The cost of not having it: Much higher. If you get sick or injured and can't work, the financial impact is devastating.

The balance: Balance insurance costs with protection. Don't over-insure, but don't under-insure either.

The Bottom Line

Most software salespeople are underinsured:

Disability insurance: Critical but often missing
Life insurance: Important but often inadequate
Downside protection: Essential but often overlooked

Why it matters: Income risk is greater than market risk for salespeople. Insurance protects against income risk.

What to do: Get disability insurance, adequate life insurance, and proper downside protection. Work with an insurance broker to find the right coverage.

The mindset: Think of insurance as downside protection, not fear. You're protecting your ability to earn income.

The sales professionals who build lasting wealth aren't just the ones who save and invest. They're the ones who protect their ability to earn income with proper insurance.

That's how you turn variable income into lasting financial security.

Disclaimer: This content is for informational purposes only and does not constitute financial, tax, or legal advice. Insurance needs and coverage vary by individual circumstances, risk tolerance, and financial situation. You should consult with qualified insurance professionals, financial advisors, or attorneys before making any insurance-related decisions. Individual circumstances vary, and this information may not be suitable for your specific situation.