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The Cost Of Disability Insurance

The Cost Of Disability Insurance

What would you do if you were injured and unable to earn an income to support yourself and your family? Disability insurance can help to ease your worries and “what if’s.” The cost of disability insurance can often be a factor of concern; however there are several determining factors that can affect the cost of your disability insurance policy.

Determining Factors

Your occupation is a huge determining factor that will be considered when your insurance policy is being worked up. If you work in a position that involves manual labor then you will be placed in a different policy class; since your chances of being injured or disabled are increased because of the physical nature of your job, you will require a different policy from someone who works in an office.

Your age, gender, the benefit amount, and the benefit period will also be factors that determine the cost of your insurance policy.

Your Salary As It Is Now

Your current salary can be a determining factor in the cost of disability insurance; as a general rule of thumb you should expect that you will pay between 1 and 3 percent of your annual salary. For example, if your annual salary is $100,000 then you could be expected to pay between $1000 and $3000 per year on your policy. Should you have a need to reap the benefits of your insurance policy, you could expect to receive about 60% of your salary as it is today. If paying your policy premiums is a bit out of the stretch of your current budget then you may want to research the various policy discounts that are available to you.

Policy Discounts

An important item about the cost of disability insurance to note is that if you will be purchasing your disability insurance policy as a stand-alone policy versus bundling it with several of your other policies you can expect to pay a higher cost. Many insurance companies offer bundled discounts to their policy holders so be sure that you take the time to find out if you are entitled to any price reductions.

Further discounts on the policies are often available if the disability policies are purchased for and paid for as a lump sum purchase. Find out from your insurance representative what kind of cash discounts is available to you.

While applying for your disability insurance policy you should carefully discuss your current debt obligations so that your insurance broker does not select a policy for you that will exceed your ability to make monthly payments towards the policy. Things like your mortgage, car payment, and other financial obligations will all be taken into consideration when it comes to the cost of disability insurance policies.

There are several types of disability insurance policies. The policy that you select should be able to keep you and your family financially afloat until you are able to get back on to your feet. It is important to note that the majority of short term disability policies do not cover a period that is long that 2 years. There are, however, methods of increasing your policies benefits; remember that your cost of disability insurance will increase when your payout benefits do.

Photo courtesy of JoshuaDavisPhotography.

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