How Much Should I Spend on Disability Insurance?
Mar 15, 2012
Jamie Fleischner

Jamie Fleischner

15 Mar, 2012

Unfortunately, there is no specific answer. The rule of thumb is that men spend 1-3% and women 2-4% to cover up to approximately 70% of their pretax income.

There are several factors that determine how much you will spend on your disability insurance premiums:

1)      Group insurance? If you have group benefits in force, you will only need to supplement your group benefits which will save you money. If you do not have any group disability insurance in force, you will pay more to insure your income.

2)      Benefit amount. The larger the benefit amount, the greater the premium. Determine how much after tax monthly income you need. If you do not live off of your whole take home paycheck, you do not need to insure the full amount, saving you money.


Disability Insurance can be very expensive. Rates are based on several factors:

  • Gender. Women pay approximately 40% more in premiums than men.
  • Occupation.  Higher risk occupations will pay more in premiums. For instance, a surgeon, CRNA, physical therapist, dentist or physician is considered higher risk than a pediatrician, physician assistant or internist. The most favorable occupations (paying the least in premiums)are occupations such as attorneys, CPAs, architects and engineers.
  • Benefit amount. The higher the monthly benefit amount, the higher the premium.
  • Age. The older you are when you purchase your policy, the more expensive your policy.
  • Health. Disability insurance underwriters look at your overall health and risk factors. Some conditions may increase your premiums.
  • Riders and benefit period. Your policy is composed of riders and each carries a price. This includes the residual rider (partial disability rider), cost of living rider and increase options.

With all of the variations in mind, disability insurance can carry a hefty price tag. As a result, if available, look for disability insurance discounts. These discounts can save you anywhere from 15-55%. The discounts tend to be steeper for women as their rates are more expensive to begin with.

Be sure these discounts are permanent. Some companies offer discounts on the original policy and subsequent increases are at a non-discounted rate which can be shocking when you decide to increase your coverage.

For more information about individual disability insurance and available discounts, contact Set for Life Insurance today. If you are interested in discounts, please mention if you are a member of an association and/or you employer’s name and we can determine if we have available discounts for you.

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