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The U.S. Social Security Administration states that one in four 20-year-olds will become disabled before reaching retirement age.  Long-term disability insurance is the best way to replace your income if a disability keeps you from working.
Long-term disability pays a percentage of your income—usually 50-60%—while you’re disabled. The benefits fill income gaps that other forms of income protection, like Social Security disability insurance, short-term disability, or Workers' Compensation, can't. Long-term disability costs are based on your salary, and can start as low as $12.50 per month.
Long-term disability premiums are usually 1-3% of your income
How much you pay is based on your policy benefits, occupation, and overall health
Policy add-ons called riders can give you more comprehensive coverage, but often come at an additional cost
In most cases, a long-term disability insurance policy costs 1-3% of your annual salary. Actual premiums vary for each individual, but long-term disability is the most cost-effective form of income protection you can get.
The chart below shows how much you might pay for coverage based on a pre-tax income of $15,000 to $200,000 per year.
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Several factors affect your premium, and no two disability insurance policies are the same. These factors include:
Age: The older you are when you buy your policy, the more it’ll cost. You’ll get lower rates by buying when you’re younger and at lower risk of disability.
Benefit period: This is how long you’ll receive disability insurance payments. Benefit periods typically last two, five, or 10 years, to age 65, or for life. The longer the period, the higher your premiums. Policygenius advisors recommend a benefit period of at least five years, since most long-term disabilities last an average of two to three years. 
Coverage amount: The more coverage you need, the higher your premiums will be. Policygenius advisors recommend setting your coverage amount at 60% of your gross (pre-tax) salary. Benefit payments are tax-free, so 60% will equal approximately 100% of your current take-home pay.
Health: The healthier you are, the more competitive your long-term disability rates will be. Habits that impact your health, like smoking, and medical conditions, like diabetes or hypertension, will cost you.
Location: Long-term disability insurance rates vary by state. They tend to be higher in states where more people file claims, but each insurer is a little different, so make sure to compare quotes.
Occupation: The riskier your job, the higher your chances of experiencing a disability. Your disability insurance will cost more or you may have limited coverage options if you have a hazardous job.
Waiting period: Long-term disability insurance has a waiting period (also called the elimination period) between when you become disabled and when you start receiving benefits. The shorter your waiting period, the higher your premiums. If you have short-term disability through your employer, it may provide some coverage to you during your long-term policy’s waiting period.
Policies that pay less, make you wait longer before receiving benefits, and pay out for a shorter period cost closer to 1% of your salary. Fuller coverage that pays greater benefits sooner and for longer costs closer to 3% of your salary. You’ll also pay less the younger and healthier you are.
The factors listed above are the most important details in setting your long-term disability policy’s base price (or base rate). But, extra features you can add to your policy—called riders—sometimes come at an additional cost that varies by insurer.
Some riders are free and come standard with your policy, like a waiver of premium rider, which covers your premiums while you’re unable to work and receiving benefits. Riders that require an additional premium but are worth considering include:
Non-cancelable: A non-cancelable rider means that your insurance company can’t cancel your policy or raise your rates if you switch to a more hazardous job. It does not mean that you can’t cancel your policy.
Own occupation: An own occupation policy allows you to qualify for benefits if you’re too disabled to return to your current job, but can still do other kinds of work. By contrast, an any occupation policy pays benefits only if you’re too disabled to do any kind of work and is harder to qualify for.
Other riders, like a cost-of-living adjustment rider (which increases your monthly benefit to match expense inflation when receiving disability benefits), are useful for some people, but are too expensive for most shoppers.
At just 1-3% of your salary, long-term disability insurance is a relatively affordable way to protect your finances. By buying when you’re younger and healthier, you can save on your rates. An independent broker can help you compare plans and policy options.
Premiums are usually 1-3% of your income, depending on your salary and policy benefits.
If the costs fit in your budget, it’s worthwhile to have some long-term disability coverage.
Premiums are set based on several factors, including your policy’s benefit amount, benefit period, waiting period, and your age, health, location, and occupation.