The Cost Of Disability Insurance
The cost of any insurance can vary widely between individuals due to several factors. Several sources say disability insurance premiums will amount to 1% to 3% of your income. So, youll pay $1,000 per year if you buy a plan that costs 2% of your income and your annual salary is $50,000.
Disability insurance premium cost depends on:
- Medical exam results
The insurance companies take all this information into account to determine what the odds are that youll become disabled and for how long. The premium is calculated based on that risk and, your occupation matters. If you are a professional lion tamer, youll pay much higher premiums compared to an accountant.
Best Disability Insurance Companies
If you or your family rely on your employment income to make ends meet or support a lifestyle youve become accustomed to, disability insurance is nearly as important as life insurance. After all, not all life-altering accidents and illnesses result in death.
And not all life-altering events that qualify for disability coverage are tragic. According to internal data from the Guardian Life Insurance Company of America, new mothers make more than one-quarter of the companys short-term disability insurance claims.
Why You May Need Disability Insurance
When youre relatively young or healthy, its easy to believe you dont need any amount of disability coverage. Youre practically invincible, right? Unfortunately, this kind of thinking leaves millions of Americans in financial peril year after year, mostly because they do not have any sort of safety net when a major illness or injury occurs.
To be clear, not having disability insurance can lead to catastrophic consequences for your family if you find yourself unable to work. Without a paycheck coming in, its likely you would struggle to pay bills and keep food on the table, and you could even lose your home. If you had a spouse or partner, they could be designated as the sole provider for your household going forward, which may or may not be realistic at all.
Unfortunately, disability occurs more often than one might think. According to the Council for Disability Awareness, more than 25 percent of todays 20-year-olds can expect to be unable to work for at least one year due to an injury or illness before they reach retirement age. Further, 5.6 percent of American workers will have some sort of short-term disability in any given year, with almost all of the most common situations being non-occupational in origin.
Tips To Find The Best Disability Insurance Policies
Obtaining a disability insurance policy isnt all that different from obtaining a life insurance policy. And many of the best life insurance companies also write disability insurance policies, so youll see plenty of familiar names along the way.
Always shop for insurance using an aggregator like Policygenius. But the following disability insurance providers, in particular, are among the best for U.S.-based workers.
There are two main types of disability insurance coverage: short-term disability and long-term disability. All of the companies on this list offer long-term disability coverage, some offer short-term disability insurance, and many of them offer other insurance products, such as term life and annuities.
This evaluation incorporates:
- Financial strength ratings from A.M. Best, which measures insurers financial stability and overall capacity to make promised benefit payouts
- Customer satisfaction ratings from the Better Business Bureau , a leading evaluator of general business quality
- Overall suitability based on each companys product mix, strengths, weaknesses, and markets served
When evaluating disability insurance companies and policies, pay close attention to policy specifics like:
- The length of the elimination period for short-term policies and long-term policies
- The length of the benefit period itself
- The monthly benefit amount
Breeze Financial & Insurance Services Group
- A.M. Best Financial Strength Rating: Not available
- BBB Customer Satisfaction Rating: A+
- Great For: Very affordable policies; 100% online process with no salespeople
Breeze offers short- and long-term disability solutions that are all about convenience and affordability. Its 100% online application process cuts traditional salespeople out of the equation, allowing would-be policyholders to focus on what matters most: finding and securing the right amount of disability coverage at the right price.
Young, healthy workers with low coverage needs qualify for long-term coverage for as little as $9 per month significantly less than many mainline insurers charge. That alone makes Breeze one of the best long-term disability insurance providers around.
Despite its technology-driven approach, Breeze prides itself on an unusually transparent process that walks applicants through the entire scope of coverage and can accommodate a range of nontraditional situations, including solopreneurs and small-business owners with complex insurance needs.
And Breeze offers low-risk applicants an instant approval option that waives the usual medical underwriting requirement no invasive medical exams or time-consuming labs required.
- A.M. Best Financial Strength Rating: A ++
- BBB Customer Satisfaction Rating: A+
- Great For: Supplementing employer-sponsored disability plans; specialized plans for part-time workers and stay-at-home parents
Disability Insurance Company Reviews
After our evaluations, we chose the best disability insurance companies: Policygenius, Aflac Disability Insurance, MassMutual Disability Income Insurance and Mutual of Omaha. Each of these companies stood out above and beyond the competition.
- Great One-Stop Shop
- Policygenius lets you compare long term disability insurance policies online from high-quality insurance companies.
- Fast Claims
- File your disability claim online during the week to receive the payment the next business day via direct deposit.
- Great Benefit Period Options
- With MassMutual disability insurance, you can craft a policy to pay benefits for two to 10 years, or up to age 65, 67 or 70.
- Great Simple Disability Policy
- Mutual of Omaha writes the Priority Income Protection disability insurance policy in simplified terms with a quick application and approval process.
Best Disability Insurance Faqs
Is disability insurance worth getting?
If you would not be able to support yourself and your dependents if you lose your ability to earn income, then disability insurance is worth the cost of premiums.
Can you buy your own disability insurance?
About half of U.S. employers do not provide disability insurance and the ones that do might not provide enough coverage. Private disability insurance â either long-term or short-term â is the best way to fill the coverage gap left by employer-provided DI.
Who offers the best long-term disability insurance?
The best company for long-term disability insurance varies based on your profession, age, gender, health, and overall financial needs. Reach out to a Policygenius agent for free to compare your options for disability insurance.Â
What Does Disability Insurance Cover
If something happens to you and you wont get your paycheck for a while, how will you pay your bills? Disability insurance can help cover your monthly bills if you get seriously ill or injured and can no longer perform your job duties.
While no one plans to become disabled, its a real possibility that you may become temporarily or permanently disabled and cant pay your bills.
Some people get disability insurance through an employer. However, if you switch companies or lose your job, you will also lose your disability coverage.
How much you receive each month and for how long will depend on the insurance and policy you purchase. Some policies will pay you a monthly benefit if youre unable to return to your previous job.
In contrast, others will only pay out if youre unable to perform any job you are qualified for based on education, ability and experience.
Its always important to do your research and read the fine print when purchasing an insurance product.
Most policies are not designed to replace your entire paycheck but rather pay you a portion of how much you made before becoming disabled.
Why You Need Disability Insurance
Think none of these will happen to you? Think again. The Social Security Administration reports that one in four of todays 20-year-olds will become disabled for 90 days or more before they turn 67 years oldand that a massive 68% of non-government workers have no disability insurance.Yikes!
Having a plan for the long term beyond a 3-6 month emergency fund is important not only to you, but also the people who rely on your income. How much better would it feel to know money is still coming in while youre recovering?
What Isnt Covered By Disability Insurance
Disability insurance is only designed to replace a portion of your income — it doesnt cover extra expenses like your medical bills and long-term care costs.
While pregnancy isnt usually covered by long-term policies, complications that extend beyond pregnancy might qualify you for benefitsbut only if you had a long-term policy in place before you got pregnant.
Short-term policies do cover birth as a disability, but you might be waiting a long six-to-eight weeks for each check.
Best For No Medical Exam: Principal Financial Group
Principal Financial Group
Principal Financial Group offers a few different disability insurance products, including the Simplified DI program. This allows consumers to get up to $6,000 a month in long-term coverage faster and with fewer requirements, like no medical exam, earning them our top spot in the no medical exam category.
Streamlined process is quick and easy
Principal will combine different periods of disability to help reach the policys elimination period
Benefits of up to $6,000 per month are available with simplified underwriting
Employment requirement is only 20 hours per week
Online applications are not available
Final answer can take a few days to receive
With a history dating back to 1879, Principal Financial Group has a long and successful track record of offering quality insurance coverage. They hold an A+ financial strength rating from AM Best and offer a variety of disability insurance products to suit consumers needs.
Principal offers individual disability income insurance policies with up to $20,000 in monthly benefits, though this maxes out at $6,000 if you want simplified underwriting and no medical exam. Elimination periods range from 30 to 365 days, with benefits lasting two or five years, or through retirement .
Unlike many other companies that require 30 hours of weekly work to be considered, Principal only requires you to work a minimum of 20 hours a week in order to qualify for a policy.
Do I Needdisability Insurance
If you are one of the primary earners for yourself or for your family, a lot is at stake if you get injured and are unable to work. If you end up suffering from a disability as a result of an accident or health issue, this may affect your ability to earn an income.
You need disability insurance in the chance that:
- You temporarily cant work
- You are permanently disabled and cannot work
- Dont put your livelihood at risk.
With disability insurance, you can rest assured that you will be covered in the off chance that you are unable to work. In fact, disability income insurance often covers between 60% to 85% of your income.
Best Policy For Caregivers: The Standard
- Policy type: Long-term
- Monthly benefit amount: $500 to $20,000
- Elimination period: 60, 90, 180 or 365 days
- Benefit period: 2, 5 or 10 years, or to age 65, 67 or 70
The Standard is unique for its family care benefit, a feature thats baked into its long-term disability policy. The benefit pays caregivers a benefit if they lose at least 20% of their income or working hours while looking after a family member with a serious health condition or illness. Its available everywhere except California, Connecticut and New York. But if youre a resident of those states, you can take advantage of the insurers other offerings like the automatic increase benefit, which boosts your monthly benefit by 4% each year for the first five years of your policy.
Must read: How we chose the best disability insurance companies
Our writers and editors are committed to objectivity and empowering our readers to make decisions free of bias.
We analyze disability insurance companies in the same way we assess life insurers. Using insurers sites and conversations weve had with various insurance companies, we weigh policy lineups, riders and underwriting guidelines, and the level of flexibility offered to customers.
To determine industry reputation, our editorial team considers the companys financial strength and reads customer service reviews.
How Does Disability Insurance Work
Disability insurance is a lot like car insurance. Auto insurance is designed to protect your car against damage and could help pay medical bills if youre injured in a car accident. You pay a monthly fee for this safety net, just like you do for individual disability insurance, which provides protection if youre unable to work due to an illness or injury. Its protection for your most important financial resource: your ability to earn an income.
See how disability income insurance from Ameritas gave this entrepreneur and his family the peace of mind coverage to keep lifes basics going.
What To Watch Out For When Purchasing A Policy
When youre shopping around for a policy, look out for these restrictions:
- Integration clause. Some policies have an integration clause of six or 12 months. This means your other sources of income like Social Security or workers compensation may be deducted from your benefit.
- Pre-existing condition limitation. This limitation excludes coverage for any disability resulting from a condition that you had before your policy went into effect.
- Mental illness limitation. Another common limitation is reducing payouts for mental illness to only one or two years.
- Exclusions. Most insurers wont pay out for disabilities resulting from acts of war, self-inflicted acts or criminal activities. And some insurers wont pay out if you become disabled due to a high-risk hobby, like skydiving.
Best For Risky Occupations: Assurity
Whether you are a mechanic, welder, state patrol officer, or hold any number of other high-risk occupations, Assurity is likely to have disability coverage for you, making them our top pick for risky occupations. Policies come with multiple built-in benefits as well as additional riders to choose from.
Coverage is available to many high-risk professions
Conditionally renewable to age 70 or 75 if employed full-time
Built-in benefits include waiver of premium, presumptive disability benefit, and more
Benefit periods range from one year to retirement age
Elimination period from 30 to 365 days
Non-cancelable rider only lasts 5 years and is not applicable at all for some higher risk occupations
Cannot buy coverage online
Online quotes dont allow for much personalization
Assurity holds an A- rating from AM Best and has roots dating back to 1890. They offer policies with full or partial coverage depending on whether youre able to work at all.
If you work in a higher-risk professionsuch as an electrician, welder, state patrol officer, mechanic, etc.you may find that buying disability income insurance coverage is tricky, and often expensive. In fact, many companies will refuse to insure these occupations altogether.
What Are The Typical Costs Of Long
Long-term disability insurance costs vary based on the salary youre looking to replace if you get injured or become ill. Other factors, including your age, gender, and occupation, also affect your rate. If you want to replace your full income, you can expect to pay between 1% and 4% of your annual income. If you make $50,000 a year, you may be able to get a policy for as little as $500 per year, or $41 a month, which is less than $2 a day.
Disability Insurance To Fit Your Life
Did you know that one in four people will be disabled at some point during their careers?1 Disability insurance is designed to protect your income by replacing a portion of your paycheck if you’re ever too sick or injured to work. It lets you rest easy knowing that your expenses will be covered, keeping your lifestyle intact and your financial plan on track so you can focus on getting better.
Aflac Disability Insurance Review
Fast Claims Payments |
Aflac is the leading voluntary supplemental insurance provider in the U.S. In addition to short-term disability insurance, the company sells life, accident, vision, dental, critical illness, cancer and other insurance products.
When Aflacs customers use SmartClaim to submit insurance claims online or via the Aflac mobile app, the companys One Day Pay policy ensures claims are processed the same day. Claims submitted by 3 p.m. Eastern time Monday through Friday get paid the next business day via direct deposit or a check.
What You Need To Know About Disability Insurance
If you had a life-changing accident or were diagnosed with a critical illness tomorrow, would you and your family be able to cope?
Photo by AbsolutVision on Unsplash
Ten years ago, Janet Freedman was rushing out the door of her home for work. Her arms loaded with tax returns, she missed a step on the stairs on her front porch and fell, hitting her head on the concrete. When her neighbours found her, she was barely conscious, with her head trapped between her own front steps and those of the house next door.
Paralyzed, with a partially severed spinal cord, it took more than six months of hospitalization and two years of intensive physiotherapy for Freedman to resume her life. She was unable to work and had no one to support her. Thank goodness I had a good private disability insurance plan, says Freedman, a certified financial planner and author of Hit by an Iceberg: Coping with Disability in Mid-Career. Those payments allowed me to concentrate on my rehabilitation and to live my life without worrying about where the money was coming from for daily living expenses. That made a big difference to me and my recovery.
Regular pay if you cant work
When calculating your coverage, keep in mind that payments from private disability insurance are tax-free, while the payout from most corporate plans is taxable.
Want even more tips to shape up your finances? Join the Money Fit Club to curb spending, boost your earnings, lower your taxes and more!
What does the * mean?
Top Disability Insurance Companies
According to The Centers for Disease Control and Prevention , 61 million adults in the U.S. live with a disability. An unexpected trauma, an accident or an illness can affect you, limiting your ability to work and support yourself and your family.
Disability can hit you at any time and any age. The Social Security Administration says that a 20-year-old has a 25 percent chance of becoming disabled before reaching retirement age. This sobering fact puts in perspective that no one is immune to disability.
The first step in getting disability coverage is learning more about your options. Here are some of the best disability companies that can help you find the right coverage for your situation.
Supplement Your Work Coverage
Many physicians start as an employee at a specific hospital but end up as a 1099 employee at multiple hospitals later in their careers. This offers benefits, like writing off expenses, but has drawbacks â specifically losing any group coverage a hospital may offer. Itâs dangerous to rely on workplace insurance, because itâs tied to your employer, and for doctors â who move around a lot over the course of their careers or choose to open their own practice â itâs an even bigger risk.
Disability insurance companies realize this, so, unlike other professions, theyâll let doctors buy the maximum amount of coverage even if you have workplace coverage. That way, youâre fully protected no matter where your residency is.
What Are The Types Of Disability Insurance
Now, there are two types of disability insurance youll see a lot of: short term and long term. They basically do the same thing in how they replace part of your monthly salary. But well get more into that later.
Even though they do the same thing, short-term and long-term disability insurance have some differences you need to know about. Heres how they stack up:
Why would you get it?
Only if your employer offers it at no cost to you
If you rely on your income and you dont have savings to replace it long term
Illinois Mutual Disability Insurance
Pros of an Illinois Mutual disability insurance policy
- Low average premium costs
Cons of an Illinois Mutual insurance policy
- Not available nationwide
Best for: Workers in skilled trades and paraprofessional careers
Illinois Mutual has been offering insurance policies for over 110 years, mainly specializing in life insurance. But, the company also offers disability insurance in 46 states. According to NAIC data, the average policy carries a premium of $56.90 per month, making it an affordable option.
Illinois Mutual has unique benefits for people who work in trades or paraprofessional careers who may find it hard or expensive to get coverage. Many insurers group occupations into classes which they use to assess risk, with some career classes seen as lower risk. For people in these careers more traditionally seen as risky, Illinois Mutual bumps the class to a higher level for lower premiums.
Unlike many other insurance companies, quotes are available online through Illinois Mutual’s website, but policies must be purchased through an agent. Policies are available in 46 states, and aren’t available in Alaska, Hawaii, California, New York, or the District of Columbia.
Ameritas Makes Individual Disability Insurance Easy
Recognized as one of the best individual disability insurance companies, Ameritas disability income insurance goes to work when you cant. We offer the options and flexibility to build income protection based on your needs. Control the cost and coverage of your policy by customizing your protection with optional riders.
Your ability to earn an income is your greatest asset. Dont let an illness or injury demolish your financial foundation. Protect your income today.
Cash Benefit Based On Salary
Most types of disability insurance offer cash benefits based on how much salary policyholders would ordinarily receive if they were still able to work. These cash benefits allow users to continue supporting themselves and their families while they are unable to work.
- Group short-term disability plans typically cover about 60% of regular salary: For every $100 the consumer usually makes, he or she will probably get about $60 via disability insurance. This money can help pay bills or buy food while the employee is unable to work.
- Individual coverages may be higher: Users can purchase supplemental insurance to get up to $70 or $80 per every $100 they would normally earn, for instance.
- Inflation riders: Users can purchase a rider for a small increase in premium that will increase their benefits each year, based on the rate of inflation.
- Residual or partial payouts: A rider can be purchased on certain disability insurance policies that allow you to return to work part-time, receive partial salary and still receive payouts from your policy.
- Individual factors in price: Besides how much salary a person earns, other factors that determine the price of disability insurance include: age, sex, current health condition, bad habits like smoking and type of job.
Individual Disability Policy Or Employer
If you are thinking of purchasing disability insurance, you may have the option of getting coverage through your employer. However, most of these group plans limit your enforcement of coverage, should you ever become disabled, under federal ERISA law.
ERISA affords great protection to the insurance company and almost none to you, the insured. The only advantage to these long term disability insurance policies is that they are cheap or even free. Your employer pays for most, if not all, of the premium.
A better option, if you can afford it, is to purchase your own individual policy. Under this option, you have the right to enforce your policy under state bad faith law and deceptive trade practices acts. These laws are more advantageous for fighting disability denials. Also, make sure you have both short term and long term disability coverage.
If you purchase individual disability coverage, premiums will be based on a number of factors, including age, health and occupation. Individually purchased policies are more expensive but you get what you pay for.
The specifics of your coverage can vary greatly depending on whether you purchase through your employer or not. It is best to check both options to make sure you are getting the best coverage for your circumstances.