Disability Insurance

Disability Insurance

Here is everything you need to know about disability insurance for individuals in Minnesota.

How much does disability insurance cost?

As a rule of thumb, an individual long-term disability insurance costs about 1% to 3% of your annual salary. This chart below gives you an idea of approximately what you could expect to pay for your disability insurance based on your earnings.

There are many factors that influence the cost of a disability insurance policy. These will be explained in the information below. Give us a call anytime if you have questions.

Annual Salary Yearly Cost Monthly Payment
$30,000 $300-$900 $25-$75
$50,000 $500-$1,500 $60-$125
$100,000 $1,000-$3,000 $83-$250
$150,000 $1,500-$4,500 $125-$375
$200,000 $2,000-$6,000 $166-$500
Source: Policygenius

Disability insurance costs depend on several factors. They include:

  • Benefit amount. Long-term disability insurance typically replaces between 40% to 65% of your pre-tax earnings. The higher that percentage is, the more your disability insurance will cost.
  • Benefit period. The length of time you would be eligible to receive disability insurance income can range from a few months to until you reach retirement age. Your disability insurance cost generally increases as the benefit period increases.
  • Elimination period length. Nearly every disability insurance policy has a waiting period before you can receive benefits after suffering an injury or illness. It is known as the “elimination period” and you can think of it as a deductible measured in time instead of money.

The elimination period can last anywhere from a few days for short-term disability insurance to two years for long-term disability insurance. By choosing a longer elimination period, you can reduce your disability insurance cost.

  • Your age. Because your likelihood of suffering an injury or illness increases as you get older, your disability insurance cost will increase as you age. Buying disability insurance when you are young is often a smart move because it is cheaper, and you may be able to lock in a low rate.
  • Your health. You will likely pay more for disability insurance if you are in poor health, smoke or if you or your family has a history of chronic disease. Some disability insurance companies let you exclude an illness or disability you already have—just know that you will not be able to collect disability insurance income if the excluded illness or injury makes it impossible for you to work.
  • Your occupation. The risks of your job and the salary it commands also factor into your disability insurance cost. More dangerous jobs and jobs that pay a high salary are typically more expensive to insure.
  • Your hobbies. Participating in risky hobbies like skydiving will often increase the cost of your disability insurance.
  • Your gender. Disability insurance can cost more for women or for men depending on their age. In general, men tend to pay more as they age.
  • The definition of disability. There are two disability definitions that disability insurance companies use:
    • Own occupation disability insurance kicks in when you can no longer perform the job you had when you became disabled. An example would be a painter who suffers a hand injury.
    • Any occupation disability insurance only kicks in if you cannot perform any job at all. To use the example above, the painter could earn an income from teaching or lecturing about painting.

Own occupation disability insurance generally costs more than any occupation disability insurance.

  • Riders. Riders are additional coverages you can choose to add to your disability insurance policy. Depending on the disability insurance company, you may or may not be charged to add them to your policy. Three common disability insurance riders are:
    • Guaranteed renewable rider means your disability insurance policy cannot be canceled as long as you pay your premiums. Some variations on this rider let you lock in your disability insurance rate as well.
    • Inflation protection rider lets you add a cost-of-living adjustment to your disability insurance policy. It increases your disability insurance income by a specified percentage after each year of disability.
    • Residual benefits rider pays partial disability insurance benefits if a disability reduces your income, but you can still work in some capacity.

There are many kinds of disability insurance policies out there that can be customized to your exact needs and budget. The best way to learn more about disability insurance and to get a disability insurance quote is from one of our licensed insurance agents.

Disability insurance is designed to protect your income if you cannot work due to illness or injury. Yet, a common misconception about disability income insurance is that its sole purpose is to cover against catastrophic events resulting from accidents.

In fact, illnesses like cancer, depression, and multiple sclerosis far more often impact your ability to work and support yourself and your family – 90% of disabilities are caused by illness.

How much does disability insurance cost?

The cost of a disability policy – especially an individual policy – can vary greatly based on benefit length, amount of coverage, age, gender, occupation, and policy riders. There is a difference between long-term vs short-term disability insurance costs. Free quotes are available.

What is disability insurance?

Disability insurance provides partial income replacement so you can pay your bills if you get too sick or injured to work. Disability happens to more people, more often than you may think. In fact, more disabilities are caused by illness than injury, including common conditions like heart disease and arthritis, and most disabilities are not covered by Worker’s Compensation.

Some employers will offer short and long-term disability benefits to their employees. A short-term policy helps you immediately after an incident, and a long-term policy helps provide financial protection for disabilities that can last for years. You can also pay for additional coverage on top of the benefits you get at work to help provide extra financial protection.

Who is disability insurance for?

If you depend on the income you receive through work to pay your expenses, then you should consider disability insurance. It ensures that you can continue to receive partial income if you end up too sick or injured to work.

Free Quote

Long Term Disability Insurance

What are the types of disability insurance?

  • Long-term disability insurance
  • Short-term disability insurance
  • Mortgage disability insurance
  • Supplemental disability insurance
  • Social Security disability insurance
  • State disability insurance
  • Workers' compensation
  • Disability overhead expense insurance
Disability Insurance form with glasses and a pencil laying on it

Is it worth it to have disability insurance?

Disability Insurance is not cheap, but it is worth It! Just think of where you and your family would be, where you might end up if your income were reduced to ZERO.

How would you get by? The mortgage? Car payments? Food and clothing? Inflation? Medical bills? College?

Where would all the money you need come from? Now, ask yourself if you need long-term disability insurance.

How long does long-term disability last?

A long-term disability policy can be created to pay out in different lengths. Most long-term disability policies pay out for two, five, or 10 years, or until retirement.

What insurance company is best for disability?

The best disability insurance company will offer a wide range of options to meet your needs. It will offer long-term and short-term disability insurance policies in addition to both individual and supplemental coverage, with some form of coverage available in most states.

What are the benefits of disability insurance?

People may incorrectly assume what qualifies as a “disability.” For example, they may believe the term applies to catastrophic conditions, such as paralysis from a car accident or a debilitating stroke. However, disabilities typically are the result of less severe injuries and more common conditions such as pregnancy, back pain, depression, and digestive disorders.

An analysis of disability claims shows “mental health,” which includes substance abuse, as one of the fastest-growing diagnosis categories in the past five years, along with digestive and circulatory issues.

Disability Claims table

Disability definition

Every disability policy has a specific definition of disability that you must meet to get benefits. The two most common definitions used by disability insurance companies are:

  • Own occupation: a person is considered disabled if they are no longer able to perform the occupation they had prior to becoming disabled.
  • Any occupation: a person is considered disabled if they are unable to perform any occupation at all.

Types of disability insurance generally available:

  • Individual
  • Group (through work)
  • Short term
  • Long term
  • Supplemental

Individual Disability Insurance

Individual disability insurance can be ideal for anyone who does not receive disability insurance through work. It is also an option for high-income earners looking for extra coverage. Small business owners need this protection. Anyone looking for financial wellness needs disability insurance. Not only can you buy this policy on your own, but it also stays with you even if you change jobs.

How much disability insurance do I need?

First, use your income needs as a guideline to determine your monthly benefit payout.

Then look at the disability insurance offered through your job and determine if that is enough. Generally, you would be paid around 40 to 60 percent of your pre-disability salary. A supplemental disability income insurance plan, either obtained through work or independently, can cover a portion of income that basic insurance may not.

Finally, the longer you are covered, the more you are paid. Plus, some professions have time limits. Office workers can generally be covered up to age 65.

Want help figuring out if disability insurance is right for you?

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