How Much Does Long-Term Disability Insurance Cost?

The average rate for a long-term disability insurance policy is around $2,200 a year, but what you pay will vary depending on your personal and professional profile.

Generally, the younger, healthier, and less risky your occupation is, the lower your premium will be.

But how much does long-term disability insurance cost? And is it worth the investment?

Long term care
Photo courtesy: The World Financial Review

In this article, we’ll answer these questions and more.

We’ll also show you how to find the best long-term disability insurance for your needs and budget.

The Cost of Long-Term Disability Insurance

The cost of long-term disability insurance depends on several factors, such as:

  • Your age, gender, health, and occupation
  • Your income and benefit amount
  • Your benefit period and elimination period
  • Your policy type and features

Here are some examples of how much long-term disability insurance costs for different scenarios:

Age Gender Occupation Income Benefit Amount Benefit Period Elimination Period Policy Type Monthly Premium
30 Male Accountant $60,000 $3,000 To age 65 90 days Non-cancelable $63
40 Female Nurse $80,000 $4,000 To age 65 90 days Non-cancelable $146
50 Male Construction worker $100,000 $5,000 5 years 180 days Guaranteed renewable $208

As you can see, the cost of long-term disability insurance can vary widely depending on your situation.

However, it’s important to note that the cost is usually a small fraction of your income, and it can provide you with a significant financial safety net in case of a disability.

An infographic showing a case example of how much long disability insurance costs by Michael Ndenga
An infographic showing a case example of how much long disability insurance costs by Michael Ndenga

The Benefits of Long-Term Disability Insurance

You may think that you don’t need long-term disability insurance because you have other sources of income or protection, such as:

  • Your savings and investments
  • Your spouse’s income
  • Your employer’s disability insurance
  • Your Social Security disability insurance
  • Your workers’ compensation insurance

However, these sources may not be enough or reliable to cover your long-term disability needs.

READ MORE: Why Disability Insurance Matters More Than You Think

Here’s why:

  • Your savings and investments may not last long enough or grow fast enough to keep up with your expenses and inflation.
  • Your spouse’s income may not be sufficient to support your household, especially if they have to reduce their work hours or quit their job to take care of you.
  • Your employer’s disability insurance may not be available or adequate, as many employers don’t offer long-term disability insurance or only provide a limited amount of coverage. Plus, if you leave your job or get fired, you may lose your coverage.
  • Your social security disability insurance may not be easy or quick to qualify for, as the eligibility criteria are very strict and the application process can take months or years. Even if you get approved, the average monthly benefit is only around $1,200, which may not be enough to cover your needs.
  • Your workers’ compensation insurance may not apply or suffice, as it only covers disabilities that are caused by work-related accidents or illnesses. Plus, the benefits may vary by state and may not replace your full income.

As you can see, relying on these sources of income or protection may not be enough or wise to secure your financial future in case of a long-term disability. That’s why having your own long-term disability insurance policy can be a smart move. It can provide you with:

  • A steady and tax free income that replaces a percentage of your pre disability earnings, usually 60% to 70%.
  • Flexible and customizable coverage that suits your needs and preferences, such as choosing your benefit amount, benefit period, elimination period, policy type, and policy features.
  • Peace of mind and confidence that you can maintain your standard of living and take care of your family and yourself without depending on others or draining your assets.

How to Find the Best Long-Term Disability Insurance

If you’re convinced that long-term disability insurance is a worthwhile investment, you may wonder how to find the best policy for your situation. Here are some tips to help you:

  • Shop around and compare quotes from different insurers, as the cost and coverage may vary significantly by company. You can use online tools like Forbes Advisor to get free and personalized quotes from top rated insurers.
  • Work with a licensed and independent agent or broker who can help you understand your options and guide you through the application process. You can find reputable agents or brokers through online platforms like Breeze or Policygenius.
  • Review your policy carefully and make sure you understand the terms and conditions, such as the definition of disability, the exclusions and limitations, the riders and benefits, and the cancellation and renewal policies.
  • Update your policy regularly and adjust it as your income, needs, and goals change. You may need to increase or decrease your benefit amount, extend or shorten your benefit period, add or remove policy features, or switch to a different policy type or insurer.

READ MORE:How I Found the Best Long-Term Disability Insurance (And You Can Too)

Conclusion

Long-term disability insurance is a valuable and affordable way to protect your income and lifestyle in case of a serious illness or injury that prevents you from working.

It can provide you with a reliable and tax free income that covers your essential expenses and helps you achieve your financial goals.

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