Is Disability Insurance Too Expensive?

Long Term Disability

Disability Insurance may not cost as much as you think.

Your most valuable asset isn’t your house, your car, or your retirement account. It’s your ability to earn an income. Leaving future income unprotected is risky for most families who would find that, without paychecks coming in, they’d be in serious financial trouble. So, Disability insurance may seem like a no-brainer, but at what price?

Discounted Income Protection Plans

Our individual plans provide coverage in the event you’re too sick or injured to work or to care for your family. Own and keep your policy, even if you change jobs.

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How much does it cost to protect your income?

Premiums for Disability insurance (also known as income protection) are based on your age, gender, smoking history, and state of residence. Your benefit amount and length of coverage will also factor into the cost of your policy. Finally, you’ll also need to consider the costs of any additional riders you add to customize your plan.

According to the Council for Disability Awareness, you can expect to spend between 1-3% of your annual salary for income protection insurance.

While coverage may not be cheap, there are ways to keep your costs down:

Apply while you’re young and healthy.

You’ll get the most favorable terms. Once you’re too sick or injured to work, you usually can’t get the protection you need. If you are studying to become a professional, you can apply for coverage before you graduate, with options to increase coverage as your income grows.

Look for a non-cancellable and guaranteed renewable policy.

Your future payments are guaranteed and the insurance company can never cancel your coverage.

Customize your coverage.

Look for options that let you increase your benefit amount as your income grows and help keep pace with the cost of living.

Buy through an association that offers member discounts.

An exclusive 16% discount for alumni and their immediate family members is available through the Alum LTD Program.

Keep in mind that once you have a quote, you can always tweak the benefits if the price seems too high—you could increase your waiting period, reduce your payout period, or even consider reducing your monthly benefit.

Is it worth it?

If you and your family rely on your income, Disability insurance is probably worth it, especially when you consider the following:

Your benefits are tax-free as long as you pay your premium with after-tax dollars.
There are no restrictions—the payments really are a substitute for your regular monthly income, and come with no strings attached.
You don’t have to pay anything back or pay any interest or penalties.
Your benefits can last a long time—to retirement age—so if you experience a disability at a young age, your policy could pay you a monthly benefit for decades.

When considering what’s at risk without disability income protection, it’s probably enough to overcome the price, which may not be as much as you may think.