Costs and Fees


Whether you purchase disability income insurance through an insurance agent as an individual policy or through an employer or professional organization as a group policy, it is important to understand the scope of your coverage. Decide which features are most important to you—the cost of the policy will vary according to the features you select. It’s important to compare the costs and benefits of different policies before making a purchase.

Factors that affect policy costs include:

Definition of disability: A policy that pays benefits if you are unable to perform the duties of your own occupation is more expensive than a policy that pays benefits if you are unable to perform the duties of any occupation for which you are reasonably qualified.

Benefit amount: Policies that replace a larger percentage of salary are more expensive. For example, a policy that replaces 80 percent of your salary will cost more than one that replaces 60 percent of your salary.

Benefit period: The longer the benefit period, the more expensive the policy. For example, a policy with a two-year benefit period will cost less than a policy that pays until age 65 or your retirement age under Social Security.

Age and health: Older people, who are more likely to become disabled, will pay more than younger people. Likewise, a person in poor health is likely to pay more than a person in good health. A policy may exclude certain preexisting health conditions from coverage.

Extent of disability: A policy that pays benefits for a partial or temporary disability costs more than a policy that only pays if the policyholder is totally and permanently disabled.

Type of job: A person with a high-risk occupation can expect to pay more in premiums than a person with a low-risk job.

Optional benefits: Cost-of-living adjustments or the option to purchase future benefits will add to the cost of premiums.

Smoking/tobacco use: Most companies give a discount to non-tobacco users or add a surcharge to the premium of a tobacco user.

Group discounts: Many companies offer discounts for policies issued on more than one person at the same time or when an employer collects the premiums and pays the insurer. Women usually pay more than men for an individual policy because claim costs are higher for women. Under a group policy, however, men and women usually pay the same rate.

Publications and Resources

Private Long-Term Disability Income Insurance. This fact sheet explains how private long-term disability income insurance offers paycheck protection and complements the safety net provided by the Social Security Disability Income program. (2018)

Disability Income Insurance: Financial Protection for You and Your Family. This guide outlines the features and costs of individual disability income insurance and offers tips and a checklist on buying the right policy for you. (2014)

Protection for the Unexpected. A serious illness or injury can harm more than your health--it can have an impact on your ability to work and meet your family's living expenses. This article explains how disability income insurance can help you avoid depleting your savings.