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What Does A Disability Insurance Policy Cost?

Well, the policies and companies that offer coverage vary dramatically, so there is no simple answer. It would be wise to work with a specialist who either solely, or mostly, focuses on disability insurance. Much like a doctor with a specialty- you want to work with a specialist to fix your specific problem. 

The purpose of this article is to give you a rough estimate about what the cost would be for you. The cost (or premium) for an individual disability insurance (IDI) policy is going to vary widely based on one’s age, occupation, health history, benefit amount, gender, optional riders chosen, and general policy structure. Most policies will typically cover about 60% of your income and cost about 1-3% of your income. This article will outline the relative cost taking these factors into consideration. 

You can also get an instant disability insurance quote from our website, and see what members of your peer group purchase based on age, gender, occupation and benefit amount. The biggest cost is not having coverage when you become disabled- You may be left with an inordinate amount of bills and no income- which could leave you destitute! 

The following will outline monthly benefits and premiums for Provider Choice Select policy available through Guardian with an occupation class 5 (there are 12 occupation classes that drive the premium 1/1M- 6/6M, and a class 5 would include some executives, some business owners, managers, and several other white collar occupations). The level monthly premiums shown below illustrate a 90 day elimination period, a to age 65 benefit period, with the Basic Partial Disability Benefit Rider included and True Own Occupation coverage.

Provider Choice Select Male
Annual Income
Benefit Age 30Age 40
Provider Choice Select Female
Annual Income
Benefit Age 30Age 40

To see roughly what the cost of disability insurance is for you specifically, you can either get an instant quote from our website, or call a specialist to get you a more exact representation of what your cost would be.

Why do disability insurance rates vary and what are the determining factors? 

The following are the primary reasons for the different premiums charged: 

Age: The older the applicant, the higher the premium will be. The minimum age for applying is 18 and the maximum age is usually 60. 

Sex: Unlike life insurance, female rates are higher for like policies than those for males. Women generally live longer than men but file more claims for disability insurance, leading to higher costs for coverage. Many female physicians for instance, will apply together with other employees to the same carrier to obtain a discount and unisex rate, which will split the rate between males and females - lowering the cost for the women that apply. 

Smoker vs. Non-smoker:Those who smoke can expect to pay as much a 25 percent more for the same protection as a non-smoker. 

Health:Pricing for DI can vary with a person’s health status. For example, a person who is obese or has diabetes or any other medical condition may have to pay an extra premium for coverage. Exclusions for a pre-existing health condition are common, but this does not generally mean an increased premium cost. 

State of Residence: Certain states do not offer the same products that other states do, based on what the insurance commission decides to approve. For a resident who applies for coverage in that state - those rates may vary for the same exact coverage in another state. A state like California may have higher rates than others, which could always change in the future. Based on my own personal experience, many medical residents who study in California and plan to move to another state for work actually wait until they move out of California to apply for coverage.


Definition of Disability: Policies vary significantly on this issue. The better, stronger policies that offer true own occupation coverage and guaranteed level premiums are going to be more expensive- but much more comprehensive. 

Occupation/ Job Duties: Occupation Class: Most disability companies have five or six occupational classes into which each applicant falls into. Risk is largely measured by what that policyholder’s day-to-day occupational duties are. Most in professional occupations (i.e., attorneys, CPAs and architects, etc.) will be placed in the highest classification and, therefore, will have a lower cost per unit of coverage. An applicant in a blue-collar or gray collar type job will pay a higher premium. 

Benefit Amount: Disability policies are typically issued with a specific monthly benefit amount, e.g., $5,000/month. The carrier has issue and participation limits, which simply put, means there is a benefit amount offered based on your income. Most of these policies do not coordinate with Social Security benefits (they pay in addition to the Social Security benefit) As benefit amounts increase, premiums increase accordingly. Most companies will not issue policies with benefit amounts of more than approximately 60% of an individual's gross income. 

Benefit Period: Policies offer various benefit periods. Most companies offering this type of coverage provide five year and 10-year benefit periods and longer benefit periods such as to the age of 65, or 67. The longer the benefit period, the higher the cost will be. 

Elimination Period: This is the period of time from the onset of the disability and until the benefit is received. Most commonly, these periods are 30, 60 or 90 days. Waiting periods of 180 and 365 days are also available. The premium decreases as the elimination period increases.

Discounts: When individuals apply as part of a group or association where an established discount program exists, it can provide substantial savings. A group, employer or association may establish a program with a disability insurance provider and the insurance policyholders receive some form of premium discount - in most cases a 10% rate discount. Moreover, some rates for females drop more with unisex rates - providing even greater savings. 

You want to check with your insurance advisor to ensure you are getting the best rate possible. 

Given that there are so many different factors influencing the rate for any one individual, it is little wonder that there is no simple answer to the question of “How much does disability income insurance cost?” However, you should plan on premiums being in the 1.5 to 3 percent of gross income range.

Individual disability insurance policy Forms 18ID, 18UD, and 18GI underwritten and issued by Berkshire Life Insurance Company of America, Pittsfield, MA, a wholly owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY. Product provisions and availability may vary by state. In New York: These policies provide disability insurance only. They do not provide basic hospital, basic medical or major medical insurance as defined by the New York State Insurance Department. For policy form 18ID, the expected benefit ratio is 50%. For policy forms 18UD, 18GI, 18UD-F, an 18GIF, the expected benefit ratio is 60%. The expected benefit ratio is the portion of future premiums that the company expects to return as benefits, when averaged over all people with these policy forms. Optional riders are available for an additional premium. 

All Select package policies issued will have a 24-month Mental and/or Substance-Related Disorder (MSRD) limitation with an associated discount. No MRSD limitation will be applied to policies issued as the result of a future increase or purchase option when exercised from a policy that did not have such a limitation. 

James Fegan holds a Financial Representative contract with The Guardian Life Insurance Company of America based out of New York, NY. 

2017-51946 Exp.01/20

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