What are factors that affects your disability insurance premium?

Answer 1

If you are speaking of an individual disability policy (one that you are purchasing for yourself), the main factors are these:

1. The amount of the monthly disability benefit sought. An insurer will allow the purchase of a given benefit based upon your historical earnings. This is because disability insurance is not intended to be a profit making proposition for the insured--in other words, it will not grant a monthy benefit of more than you were making. To do otherwise would give the insured an incentive to "become disabled", which is fraudulent.

2. The elimination period chosen. This is similar to a deductible in a property and casualty policy. It is a period of time that must elapse before benefits start. Generally, a longer elimination period will reduce premium. It can be, for example, 30-60-90-120 days of continuous disability.

3. Whether the policy is an "own occupation" or an "any occupatiion" policy. The first will generally deem you to be disabled and entitled to benefits if you are unable to do the significant duties of the occupation that you held as of the onset of disability. The second will pay benefits if you are unable to perform the duties of an occupation for which you are suited by education, experience or similar factors. The first is more costly than the latter.

4. Your health at the inception of the policy. Disability policies are medically underwritten in much the same way as life insurance policies.

5. The length of time that disability payments are payable. Ordinarily, there is a coordination of this period with a specified age of retirement--such as age 65 when Medicare can be claimed.

There may be others particular to the policy that you are considering.