Disability insurance costs may vary widely from one policy to another. Among the things that may influence disability insurance costs are the policy holder’s occupation and health status. The length of time for which an insurance company pays benefits may influence insurance premiums as well. Additionally, the length of the waiting period before an insurance company will pay benefits may also affect the cost of a policy.
One of the factors that may influence disability insurance costs is the occupation of the policy holder. In most cases, a person who has a job that involves a lot of hazards is more likely to pay higher disability insurance premiums than a person who has a safer job. For example, a person who works as a bookkeeper is likely to pay less in disability insurance premiums than a person who works on a construction site. Interestingly, however, some people with jobs that many view as less hazardous may also face higher premiums. For instance, a person who does detailed work with his hands may have to pay higher premiums because of the fact that a minor injury to his hands could lead to a term of disability.
Often, the health status of a person who has applied for disability insurance also factors into disability insurance costs. In general, a person who is in good overall health is less of an insurance risk than someone who has documented health problems. Likewise, those who have health problems that are more likely to lead to disability often face higher premiums. For example, if a person has a history of back pain, an insurance company may charge him more because his back pain could become disabling.
The length of the insurance term usually factors into disability insurance costs as well. In general, policies that provide benefits for longer periods of time often charge higher premiums. For example, a person is likely to pay more for a disability insurance policy that provides benefits until the policy holder reaches retirement age than he would for a policy that only pays for two years. Additionally, the benefit amount may influence premiums as well. A policy that pays 70 percent of a person’s income, for example, is likely to cost more than one that only pays 50 percent of the policy holder’s income.
Disability insurance costs may also depend on the elimination period set in the insurance contract. The elimination period consists of the number of days a person must be disabled before he starts to receive benefits. Some policies may have an elimination period that lasts for 30 days while others may require a policy holder to wait for as many as 180 days. Shorter elimination periods are often associated with higher premiums.