How much does disability insurance cost?
The average cost for a disability income insurance policy is 1% - 3% of your annual income?
Cost Of Disability Income Insurance
Assumptions and Optional Benefits: $50,000 Annual Salary, $2,500/Monthly Benefit, Colorado Resident, Male, Occupation Class 4A, Non-Smoker, 90 Day Elimination Period, To Age 67 Benefit Period, Your Occupation Protection, and Residual/Partial Disability Benefit rider.
You can expect to pay between 1% - 3% of your annual gross income for a quality policy.
Example: If you are earning $50,000 per year you can expect to pay between $500 - $1500 per year depending on your occupation, age and the level of benefits and optional riders that you include on your policy.
Next, determine what your personal budget is for disability insurance. Where does your budget fall between the 1% - 3% of your annual income? Then, let us know what your budget is. We'll work with you to maximize the benefits of your disability policy based on your specific budget.
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How are disability premiums determined?
Disability premiums are based on your age, sex, occupation and the amount of potential lost income you are trying to protect. In general, the lesser the chance that your occupation puts you in harms way, the lower the premium. The higher the chance of injury, the bigger the premium. So, for instance, an accountant working in an office would have much lower disability premiums than a construction worker.
Disability premiums are also based on the specifics of the policy and what additional benefits are added. Does the policy consider you disabled if you can't work in any occupation, or if you can't work in your occupation? Is the policy non-cancelable and guaranteed renewable, or can the insurance company raise the premium or cancel your policy? Optional benefits added to the policy such as inflation protection, residual benefits and the ability to increase your policies benefits at a later date with no medical exam will also change the level of premiums of a disability policy.