What factors influence the cost of disability insurance premiums?

Premiums are based on the applicant’s age, gender and occupation, health status, the amount of coverage applied for and the specific policy features requested. The younger you are when you apply for disability insurance, the less it will cost. Males pay less than females for the same coverage while professional/white collar applicants pay less than blue-collar applicants. Finally, the less dangerous your occupation, the lower your premium will be.

Always research carriers and buy from a company with a stellar claims-paying history. Cheap premiums might look attractive, but they'll do you no good if the insurance-provider goes broke when you need it most.

Is there any way to save on premiums?

One way to reduce disability premiums is to opt for a longer waiting period before benefits begin. Most policies have a 90-day waiting period. If you can hold out for six months by living off savings, you could reduce your premiums by 10 to 20 percent with a 180-day waiting period.
Keep in mind, though, that disability payments are paid retroactively on a monthly basis. While a longer waiting period (i.e., 180 days) will reduce your annual premium, it may pose too much of a financial hardship because your first check won’t arrive till the 7-1/2 month mark.

Another way to reduce premiums is to opt for a five-year benefit period instead of coverage through age 65. Limiting your benefit period is a risky gamble, as your disability might last much longer than 60 months. What happens when your benefits run out and you are still disabled?

Whatever you do, don’t miss a premium payment. If you forget, you’ll get one reminder notice. After that, your policy will lapse, and all those premiums you’ve paid over the years will go down the drain and you will have to qualify again when you are older and your health may have declined.

More Insurance and Legal FAQs:

• All Disability Insurance FAQs
• All Insurance and Legal FAQs