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Disability Insurance > Articles > Disability Insurance 101 > Cost of Disability Insurance

Cost of Disability Insurance

by Gary Fegan



“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 disability specialist who either solely, or mostly, focuses on disability insurance. Much like a doctor with a specialist- 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 of insurance 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 of disability insurance 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 Plus and ProVider Plus Limited policies 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 preferred risk class, a 90 day elimination period, a to age 65 benefit period, with the Residual Disability Benefit Rider included and True Own Occupation coverage. The first graph will be for the ProVider Plus policy premiums, one of the strongest contracts in the industry. The second graph will illustrate for the newer ProVider Plus Limited policy that is a less expensive option for people who don’t require the most comprehensive protection.

ProVider Plus Male
ProVider Plus Limited Male
Annual Income
Benefit Age 30Age 40Age 30

Age 40

$50,000$2,850$61.09$92.61$53.87$81.47
$100,000$5,000$105.29$160.58$92.81$141.22
$150,000$7,150$149.49 $228.56$131.75$200.98
$200,000$9,200 $191.64$293.37$168.88$257.96


ProVider Plus Female
ProVider Plus Limited Female
Annual IncomeBenefit Age 30Age 40Age 30

Age 40

$50,000$2,850$100.14$137.50$88.37$121.03
$100,000$5,000$173.90$239.33$153.34$210.64
$150,000$7,150$247.45 $341.17$218.30$300.24
$200,000$9,200$317.68$438.27$280.25$385.68



two executives talking at tableProVider Plus Limited has the same strong base policy as ProVider Plus with package-exclusive configurations and optional riders that provide benefit-rich basic income protection at an affordable price. Some differences in the two offerings include:

• The ProVider Plus policy has no limitation on benefits payable for mental disorders1. ProVider Plus Limited includes a 24-month limitation for Mental and/or Substance Related Disorders and a corresponding permanent policy discount2.

• Another difference is that the Residual Disability Benefit Rider3available with ProVider Plus is triggered at a 15% loss of income due to injury or sickness. The Basic Residual Disability Benefit Rider available with ProVider Plus Limited is triggered at a 20% loss of income and a loss of time or duties due to an injury or sickness. Sometimes an illness or injury doesn’t cause a total disability but does limit your ability to work, which results in decreased income. Or, you might suffer a total disability and return to work, but not at your pre-disability earnings. These residual riders help support your financial recovery in the event that you are residually (partially) disabled.

• ProVider Plus offers 3 different Cost of Living Adjustment Riders (COLA), including a 3% Compound, 6% Maximum, and a 4-year delayed COLA Rider4. ProVider Plus Limited only offers one option- the 3% Maximum COLA Rider3. All four riders are designed to adjust your policy’s monthly benefit annually to help keep pace with inflation during a disability.

• Finally, ProVider Plus offers the Future Increase Option Rider3 and ProVider Plus Limited offers the Benefit Purchase Rider. Both riders are designed to help protect a growing income by providing you the opportunity to increase your coverage with no medical insurability requirement.

Guardian offers two great policies to meet many people’s disability insurance needs- The ProVider Plus is a more comprehensive product offering, but it may be a higher premium than you may want to pay. ProVider Plus Limited may be a good solution in that situation. To see roughly what the cost of disability insurance is for you specifically, you can either get an instant disability insurance quote from our website, or call a disability 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 for disability insurance:

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 disability insurance 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 disability insurance 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. States like California and Florida 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. Disability Insurance 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 disability companies will not issue policies with benefit amounts of more than approximately 60% of an individual's gross income.

Benefit Period: Disability 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.



ProVider Plus/ProVider Plus Limited:
Berkshire Life Insurance Company of America, Pittsfield, MA, underwrites and issues the disability insurance policy forms 1400, 1500 or 1600. Berkshire is a wholly owned stock subsidiary of The Guardian Life Insurance Company of America which is located in New York, NY. Policy forms 1400, 1500, or 1600 provide disability income insurance only. They do not offer major medical insurance, basic medical or basic hospital insurance as set forth by the New York State Insurance Dept. These policy forms have an expected benefit ratio of 50%. In New York only, policy forms 1400-F, 1500-F or 1600-F have an expected benefit ratio of 60%. Expected benefit ratio is the amount of future premiums the company predicts will be returned as benefits to the consumer when averaged over all the people who own this policy form. The availability of this policy series, optional riders and provisions, as well as features, may vary from state to state.

Residual:The Loss of Income Indemnity payable under the Residual Disability Benefit Rider may be reduced by benefits payable under individual disability insurance policies that were in force before the effective date of this rider, according to your circumstances.

FIO: Restrictions and limitations apply. While medical information is not required when exercising a future increase option, applications to exercise an increase option will be financially underwritten, taking into consideration both the applicant’s then current income, as well as all disability insurance which is then in force, or for which the insured has applied or is eligible to receive.


1Twenty-four month mental and/or substance-related disorders limitation is included on all policies issued to anesthesiologists/anesthetists (MD, DO), emergency room physicians, pain management physicians, and nurse anesthetists. Limitation also applies to all new policies issued in the states of California and Florida. The limitation does not apply to policies issued as a result of a future increase option or future purchase option where the policy from which the option is exercised does not contain such a limitation. The limitation does not apply to any policies issued in the state of Vermont, regardless of occupation.

2 A twenty four month mental and/or substance-related disorders limitation is included on all ProVider Plus Limited policies. The limitation does not apply to any policies issued in the state of Vermont, regardless of occupation. The Mental and/or Substance-Related Disorders Limitation Discount is not available in Vermont or Florida or on policies with a 2 year benefit period.

3If you choose to have an optional rider on your policy your premium will increase.

4This optional rider does not necessarily protect against an increase in the cost of living.

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

2014-11830 Exp. 10/2016


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