<p>In rural Tanzania, a single episode of illness can quickly disrupt household stability and increase vulnerability. Disability and chronic illness not only affect physical health but also reduce income security, productivity, and overall well-being. This study examines whether health insurance serves as a lifeline for individuals living with disability and chronic illness in rural Tanzania. Using nationally representative secondary data from the FinScope Tanzania 2023 Individual Survey (N = 9915), the study applied a non-experimental cross-sectional design. Binary probit models were used to identify the socio-economic factors associated with disability and chronic illness, while an ordered logistic regression model was estimated to examine how these conditions and insurance coverage associate with vulnerability level, which in this study represents better life conditions and self-care capacity. The findings show that age and gender significantly increase the likelihood of disability and chronic illness, while higher education and mobile phone ownership reduce this probability. Disability and chronic illness significantly increase vulnerability levels, confirming that health shocks intensify socio-economic risk. However, health insurance reduces vulnerability and significantly weakens the negative impact of disability and chronic illness. The results suggest that insurance can act as a protective mechanism by improving resilience and supporting self-care, although overall coverage remains low, particularly among highly vulnerable households. Expanding equitable access to insurance is therefore critical for strengthening household stability and improving welfare outcomes in Tanzania.</p>