Disability insurance can be a vital safety net for anyone who fears losing their income. Both short and long-term policies are available which protect you from being unable to work through either illness or injury. However, it comes at a cost that can vary depending on several factors.
If you’re interested in disability insurance, then you are no doubt wondering what those factors are. That’s where we can help. Here, we’ll look at what affects disability insurance so you can better understand your policy.
Related Article: https://www.marathoninsurance.ca/blog/what-is-disability-insurance-how-does-it-work/

1. Age

Age is most likely going to be the biggest factor in any health-related insurance. Younger people are going to pay lower premiums as they are statistically less likely to have health problems. As you age, the risk increases, and with it, so do premiums.
This is one of the factors that you have no control over. As with all types of insurance, the premiums are essentially a risk assessment. With disability insurance, the older you are, the higher the risk that the insurance company will need to pay out.

2. Health Status

Of course, the current state of your health is also going to have a big impact. You can expect a much lower premium if you don’t have any pre-existing conditions or a history of bad health.
Due to this factor, a medical examination may be required, along with a review of your medical history. If you have a condition such as diabetes, then this will increase the cost of your premiums or even lead to a denial of coverage.

3. Occupation

The insurer will also do a risk assessment of your job. They will then place that occupation into a category depending on its likelihood of injury or illness. A classic high-risk job would be construction work where safety equipment is required. On the other end of the scale, desk jobs are seen as having lower risk and will, therefore, have lower premiums.

4. Income Level

Your disability insurance will cover a certain percentage of your income for the time stated in the policy. The higher your income is, the more that the insurance company will have to pay. If you’re a high-income earner, then your policy is going to cost more than someone with lower-income employment.

5. Policy Type

There are two main types of policies, which are short and long-term. The exact terms for each can vary, but the short term usually covers you for up to six months. Long-term coverage can pay out for several years, even up to retirement.
Due to this difference, it’s clear that short-term disability is going to be the cheaper of the two policies as insurers know they won’t be paying out for years on end. If you want long-term coverage, your premium will need to be higher.
Related Article: https://www.marathoninsurance.ca/blog/what-is-long-term-disability-insurance/

6. Benefit Period

This links in with the last point. As we mentioned, the terms of a policy can be different. Some may have a two-year long-term disability plan, whereas others may have a 10-year plan. The longer the benefit period, the more you’ll pay.

7. Waiting Period

The waiting period (formally called the Elimination Period) is the amount of time you have to wait after becoming disabled for the benefits to begin. For insurers, a longer waiting period will reduce the overall cost, and therefore, they’ll offer cheaper premiums for this.

8. Optional Riders

As with most insurance policies, you can have optional riders that can give you additional benefits. Examples of disability insurance include being able to adjust the coverage to keep pace with inflation, increasing coverage without a medical exam, or still paying out if you can work in another capacity. While these riders can be useful, they do come with an increased premium.

10. Lifestyle and Gender

Risky lifestyle choices such as smoking can have a negative impact on your health assessment. So can having risky hobbies such as climbing and skydiving. Lying about these lifestyle choices can lead to an invalid claim.
Gender is also a factor, with women often needing to pay more. This is thought to be down to the potential for problems during pregnancy, and also women being more likely to use health services.

11. Group vs. Individual Policies

Many employers offer disability insurance, which comes under the scope of a group policy. As there is a shared risk, these policies are usually cheaper than individual plans. However, individual plans are more customizable and can be better for your circumstances.

Final Thoughts

As you can see, disability insurance is influenced by a wide range of factors. Some of these, such as lifestyle, you can control, but most of them are based on factors you can’t change. Due to this, it’s especially important to shop around to find the right deal.
Disability insurance can be complicated, and it’s best to work with an insurance broker. They’ll be able to answer any questions you have and find the perfect policy for you. If you’re interested in disability insurance, contact Marathon Insurance today. We’ll be happy to find a great quote for you.