Generally, expect to spend about 1% to 3% of your annual income on a long-term disability policy. That said, since lots of factors go into the cost of your disability insurance, it’s more accurate to get quotes instead of trying to calculate your rates by yourself.
Our disability insurance calculator can show you a cost estimate and help you figure out how much coverage you need and for how long, so you can get a quote that meets your needs.
How does a disability insurance calculator work?
Long-term disability insurance pays out for years or decades after you’re disabled, even all the way to retirement. A disability insurance calculator can help you estimate your long-term disability rates.
Follow these steps to use our long-term disability insurance calculator and get quotes from top disability insurance companies:
Enter details about yourself: Like your height and weight, job and income, education level, and location.
Customize your policy: Pick whether you want own or any-occupation coverage, what your waiting period will be, and how long you want your benefits to last.
Choose coverages: Get more protection with extra riders like cost of living increases and survivor benefits.
Receive your estimate: See how much you’ll pay for a policy and get real disability insurance quotes from top companies.
What type of disability insurance do you need?
There are a few different kinds of disability insurance, but long-term disability insurance provides the most protection and is the best choice for people with high incomes, dependents, or highly-specialized jobs.
A long-term disability policy can cover you for years or even decades, while the benefits from short-term disability insurance usually only last for up to a year.
It’s also easier to get long-term disability insurance than Social Security Disability (SSDI) benefits. While SSDI doesn’t cost anything, it only pays out around $1,300 a month — much less than what most people need.
Calculating how much disability insurance you need
You can calculate how much disability insurance you need based on your income and monthly expenses.
Your disability insurance benefit should cover 60% of your income, which usually lines up with your after-taxes pay. So if you typically make $10,000 a month in pre-tax earnings, you need a monthly disability benefit of $6,000.
You may want to get more disability insurance after you factor in your:
Expected income: If you’re early in your career and expect to make more money later on, get a policy that covers your future income, not what you make now.
Existing disability insurance policies: Supplemental disability insurance can add to an existing policy that doesn’t cover all your current needs.
Retirement contributions: Some companies offer riders that can keep up your regular contributions to your retirement funds.
Total lifetime earnings: Factor in expected raises and consider a rider that allows you to make changes to your policy later on.
Unpaid debt: Some disability insurance companies offer benefits that can cover your student loans if you can’t work anymore.
Savings: If you have significant savings, you may be able to get by with less in disability insurance benefits.
How long do you need long-term disability insurance?
When you calculate disability insurance quotes, you’ll have to choose a benefits period, which is the maximum length of time your policy will pay out.
Long-term disability insurance lasts at least two years but the benefits period can last till you retire (short-term disability insurance covers you for shorter periods).
Choosing a benefits period that lasts up to age 65 is the best option for protection, but you may decide on a shorter benefits period if you’re older or can’t afford a more expensive policy.
How is the cost of long-term disability insurance calculated?
Long-term disability insurance usually costs about 1% to 3% of your salary, so that’s an easy way to get a rough estimate of your rates before you go through the process of getting an actual quote.
Annual salary | Cost of long-term disability insurance |
|---|---|
$75,000 | $63 to $188 per month |
$100,000 | $83 to $250 per month |
$125,000 | $104 to $313 per month |
$150,000 | $125 to $375 per month |
$175,000 | $146 to $438 per month |
$200,000 | $167 to $500 per month |
$225,000 | $188 to $563 per month |
$250,000 | $208 to $625 per month |
$275,000 | $229 to $688 per month |
$300,000 | $250 to $750 per month |
There are other factors that go into what you pay for disability insurance, which is why getting a quote is the best way to estimate your rates. What you pay for a long-term disability policy also depends on your:
Age: Rates get more expensive as you age, but you can lock in cheaper coverage by getting a policy early.
Benefit period: Picking a longer benefits period means higher premiums.
Coverage details: Expect higher rates if you have a policy with more coverage and added riders.
Occupation: A risky job makes it harder to find cheap coverage.
Smoking history: Smoking (and other risky habits) means your rates will go up.
Waiting period: Your rates will be cheaper if you can wait longer to receive benefits after becoming disabled.
Frequently asked questions
Is there an easy way to calculate the cost of your disability insurance?
The easiest way to estimate your disability insurance costs is by starting at 1% to 3% of your annual income as a baseline. Your rates may get more expensive if you add riders to a basic disability insurance policy.
How do you calculate how much disability insurance you need?
Our calculator can help you decide how much disability insurance you need. The right amount for you depends on your income, expenses, debt, coverage needs, and any other disability insurance policies you have.
How do you calculate your disability insurance buyout?
A disability insurance buyout is a lump-sum payout that insurance companies offer you instead of your monthly benefits. A payout calculator is different from a calculator for coverage and rates. If you think you should get a higher disability insurance buyout, it’s best to speak with a lawyer or insurance expert to be sure you’re being offered a good deal.
