A private disability insurance policy costs between 1% and 3% of your annual salary. Coverage might look pricey, but disability benefits are crucial to keeping up with your expenses if you become too sick or injured to work. To find you the best disability policy, we'll share a few tips to get comprehensive coverage without breaking the bank.
Shop around for competitive rates
Disability insurance replaces your paycheck if you become too ill or injured to earn an income. Rates vary depending on your occupation, your health, and how much coverage you get. But, every insurance company assigns different rates to each occupation and medical condition. That means you could get cheaper rates from one insurer than another.
Work with an independent insurance agent or broker to find the provider that’s the best fit for you.
Reduce your coverage
The benefits you choose to include in your policy and how flexible your coverage is have a significant impact on your premiums. While having less coverage than you need isn’t recommended, some disability insurance is better than none. Pulling back on your coverage and some policy features can lower your costs. Consider getting a:
Policy with fewer riders: These policy add-ons customize your coverage, but some that require an extra premium aren’t necessary, like the return of premium and cost of living adjustment riders.
Shorter benefit period: Under long-term disability, you can get benefit payments for two years or up to retirement. Policygenius experts suggest a period of five years to get adequate protection and avoid overspending.
Longer elimination period: Also called the waiting period, extending the time between when you become disabled and when your insurer starts to pay benefits will lower your rates.
Any-occupation policy: Instead of an own-occupation plan, which pays benefits if you can’t do your own job, you can buy a policy that pays out if you can’t do any job. Any-occupation policies are much cheaper, but it’s harder to qualify for benefits.
Lower monthly benefit: You can get less than the recommended 60% of your income if you can afford to dip into an emergency fund. This option is risky — you can’t predict how long you’ll be out of work — and shouldn’t be your first choice.
Get group disability insurance
Employers often offer group disability insurance at little or no cost to their employees. You don’t need to go through a health screening for a group policy, so you won’t be charged higher premiums if you have a pre-existing condition.
However, a group policy usually doesn’t provide enough coverage and you can’t keep it if you leave your company. The best option is to get group coverage to supplement your private disability insurance, which might allow you to reduce some of your private coverage.
Work on your health
Having health conditions or lifestyle habits that increase your risk of injury or long-term illness will result in higher premiums. You can’t change your entire health history, but there are a few steps you can take to improve your standing with the insurance company:
Adjust your diet or exercise: Conditions like high cholesterol can improve with some lifestyle changes. Talk to a medical professional before making any major adjustments.
Pursue treatment: Some providers are more flexible if you’re treating your medical conditions, especially if you can show that your health has improved as a result.
Quit smoking: You’ll pay more for disability insurance if you smoke, use chewing tobacco, or vape. Quitting will save you money, but only if you can stay nicotine-free for a year or more.
Finding a disability policy that fits your needs doesn’t have to mean compromising your budget. Comparing quotes from different companies and putting extra thought into how much coverage you need can help you secure comprehensive income protection at a lower cost.