Disability insurance generally costs about 1 to 3% of your income, so if you make $110,000 a year, $91 to $275 is a fair estimate for a long-term disability policy. But lots of factors go into the cost of disability insurance, so it’s more accurate to get actual disability quotes instead of trying to calculate rates by yourself.
Our disability insurance calculator can help you see a cost estimate, plus we can help you figure out how much coverage you need and for how long — that way you can get a quote that meets your needs.
How to use our disability insurance calculator
Long-term disability insurance pays out for years or decades after you’re disabled, even all the way to retirement. A disability insurance calculator can help you estimate your long-term disability rates.
Follow these steps to use our long-term disability insurance calculator and get quotes from top disability insurance companies:
What type of disability insurance do you need?
There are a few different kinds of disability insurance, but long-term disability insurance provides the most protection and is the best choice for people with high incomes, dependents, or highly-specialized jobs.
A long-term disability policy can cover you for years or even decades, while the benefits from short-term disability insurance usually only last for up to a year.
It’s also easier to get long-term disability insurance than Social Security Disability (SSDI) benefits. While SSDI doesn’t cost anything, it only pays out around $1,300 a month — much less than what most people need.
Calculating how much disability insurance you need
You can calculate how much disability insurance you need based on your income and monthly expenses.
Your disability insurance benefit should cover 60% of your income, which usually lines up with your after-taxes pay. So if you typically make $10,000 a month in pre-tax earnings, you need a monthly disability benefit of $6,000.
You may want to get more disability insurance after you factor in your:
Expected income: If you’re early in your career and expect to make more money later on, get a policy that covers your future income, not what you make now.
Existing disability insurance policies: Supplemental disability insurance can add to an existing policy that doesn’t cover all your current needs.
Retirement contributions: Some companies offer riders that can keep up your regular contributions to your retirement funds.
Total lifetime earnings: Factor in expected raises and consider a rider that allows you to make changes to your policy later on.
Unpaid debt: Some disability insurance companies offer benefits that can cover your student loans if you can’t work anymore.
Savings: If you have significant savings, you may be able to get by with less in disability insurance benefits.
How to calculate your disability insurance benefits period
When you buy disability insurance, you’ll have to choose a benefit period, which is the maximum length of time your policy will pay out.
You can usually choose either a specific number of years, like between two and 20 years, or you can choose a policy that will pay out through retirement age (usually set at 65 or 67).
If you’re near retirement age and you have lots of money saved away, you may only need a short benefits period to ensure you won’t eat into your existing savings if the worst happens.
But usually choosing a benefits period that lasts up to age 65 is the best option if you’re still in the beginning or middle of your career and you anticipate many more years of earning.
When can I drop my disability insurance?
Do you have enough money saved up that you could keep up your lifestyle indefinitely if you no longer had a job and an income? If your answer is no, you should probably keep your disability insurance policy.
You might want to consider dropping disability insurance or lowering your benefits once you’re close to retiring, assuming you have enough money saved up to support yourself without a job, or no longer have dependents or debt.
Some disability insurance policies last until you’re 67 years old, so if you only have a few years left before retirement, you can cancel your coverage and invest the extra money you would have used to pay your disability insurance premiums.
How is the cost of long-term disability insurance calculated?
Long-term disability insurance usually costs about 1% to 3% of your salary, so that’s an easy way to get a rough estimate of your rates before you go through the process of getting an actual quote.
But there are other factors besides income that go into what you pay for disability insurance, which is why getting a quote is the best way to estimate your rates. What you pay for a long-term disability policy also depends on your:
Age: Rates go up as you age, but you can lock in cheaper coverage by getting a policy early.
Benefit period: Picking a longer benefits period means higher premiums, but it also means more protection.
Coverage details: Expect higher rates if you have a policy with more coverage and added riders.
Occupation: A risky job makes it harder to find cheap coverage.
Smoking history: Smoking (and other risky habits) means your rates will go up.
Waiting period: Your rates will be cheaper if you can wait longer to receive benefits after becoming disabled.
Annual salary | Cost of long-term disability insurance |
|---|---|
$75,000 | $63 to $188 per month |
$100,000 | $83 to $250 per month |
$125,000 | $104 to $313 per month |
$150,000 | $125 to $375 per month |
$175,000 | $146 to $438 per month |
$200,000 | $167 to $500 per month |
$225,000 | $188 to $563 per month |
$250,000 | $208 to $625 per month |
$275,000 | $229 to $688 per month |
$300,000 | $250 to $750 per month |
Frequently asked questions
Is there an easy way to calculate the cost of your disability insurance?
The easiest way to estimate your disability insurance costs is by starting at 1% to 3% of your annual income as a baseline. Your rates may get more expensive if you add riders to a basic disability insurance policy.
How do you calculate how much disability insurance you need?
Our calculator can help you decide how much disability insurance you need. The right amount for you depends on your income, expenses, debt, coverage needs, and any other disability insurance policies you have.
How do you calculate your disability insurance buyout?
A disability insurance buyout is a lump-sum payout that insurance companies offer you instead of your monthly benefits. A payout calculator is different from a calculator for coverage and rates. If you think you should get a higher disability insurance buyout, it’s best to speak with a lawyer or insurance expert to be sure you’re being offered a good deal.
How do you calculate the taxes you’ll pay on your disability insurance?
If you pay for your disability insurance with after-tax dollars, you won’t have to pay taxes again on your benefits if you file a claim. But if you pay with pre-tax dollars, like if you get a policy through work, you’ll have to pay taxes on any benefits like you do with your normal income.
