The cost of premiums for disability insurance can fall in to quite a wide range of 1-9% of your salary. Some of the most significant factors in the price are:
Just like life insurance and critical illness insurance, disability insurance is affected by your age. As you age, your premiums will increase, so getting coverage in place while you are young will help lock in your premiums at a reasonable rate.
Similar to other types of insurance coverages, your health also affects your premiums. The healthier you are, the lower your premiums will be – yet another reason to get disability insurance while you are young and healthy. Your smoking status would also be considered a component of your health and would also affect your premiums.
The amount of monthly benefit you select will also impact your premiums. The higher the coverage amount, the more risk there is to the insurance company, and therefore your premiums will increase. Your disability policy will have a maximum limit of coverage you can apply for, which must be less than your current income while you are working.
Depending on the type of job that you have, it can reduce, or increase your premiums. Higher risk jobs will result in increased premiums. An important thing to remember is that not all disabilities are physical, or are the result of an accident. Even though your job may not be dangerous, there are other causes of disability that could affect you.
When applying for a disability policy, you will also be able to select your benefit period. This is the maximum period of time you will be able to receive the benefit (that could be 2 years or until age 65 for example). The longer the benefit period you select, the higher the premiums.
Your policy waiting period is the number of days after the onset of the disability before you are eligible to receive payment. You are able to select this at the time of application. The longer the waiting period, the less expensive your policy premiums will be.
Additional customizations added to your disability policy are called “riders”. Disability insurance has a number of different riders that will allow you to customize your policy to fit your needs. The riders available include future insurability option (which allows you to increase your coverage in the future as your income grows without any medical underwriting), cost of living adjustment (to keep pace with inflation), or many other options.