How Much Does Disability Insurance Cost?

Disability insurance protects your most valuable financial asset: your ability to earn income. But before buying a policy, most people want to know the same thing. How much will it cost? The answer depends on several factors, including your age, health, occupation, and the specific coverage options you choose.

As a general rule, individual disability insurance costs between 1 and 3 percent of your annual gross income. For someone earning $50,000 per year, that translates to roughly $500 to $1,500 per year, or about $42 to $125 per month. This guide breaks down exactly what drives that price, how group and individual coverage compare, and practical strategies to lower your premium without sacrificing the protection you need.

What Determines the Cost of Disability Insurance

Disability insurance pricing is not one-size-fits-all. Insurers evaluate several personal and policy-related factors to determine your premium. Understanding these factors helps you make informed choices when shopping for coverage and gives you leverage to adjust the cost to fit your budget.

The primary factors that affect your disability insurance premium include your age at the time of application, your current health and medical history, your occupation class, the monthly benefit amount you select, the elimination period before benefits begin, the benefit period for how long benefits last, and any optional riders you add to the policy. Each of these factors can move your premium significantly in either direction.

Age and Health: The Personal Factors

Your age at the time you apply is one of the biggest cost drivers. Younger applicants pay less because they are statistically less likely to become disabled in the near term and because a non-cancelable policy locks in that lower rate for the life of the contract. A 30-year-old might pay 30 to 50 percent less than a 45-year-old for the exact same coverage. Buying early is one of the simplest ways to save money over the life of your policy.

Health is the other major personal factor. During the underwriting process, the insurer reviews your medical history, current conditions, medications, height, weight, and lifestyle habits such as tobacco use. A clean bill of health typically qualifies you for the best rates. Pre-existing conditions like diabetes, back problems, or a history of depression can result in higher premiums, exclusion riders that carve out specific conditions, or in some cases, a decline of coverage. Applying while you are healthy gives you the best chance at favorable pricing.

Occupation Class: How Your Job Affects Your Premium

Insurance companies classify every occupation into a risk category, typically numbered from Class 1 (highest risk) to Class 5 or 6 (lowest risk). Your occupation class has a dramatic effect on your premium. A construction worker classified as Class 1 might pay two to three times more than an accountant classified as Class 5 for the same benefit amount and policy features.

This makes sense from a risk standpoint. People in physically demanding jobs file more disability claims than people who work at a desk. But occupation class is not just about physical labor. Some jobs involve exposure to hazardous materials, irregular hours, high stress, or travel risks that increase claim likelihood. Each insurer has its own classification system, so it is worth checking how your specific job is rated by different companies. You may find that one insurer classifies your occupation more favorably than another, resulting in a lower premium.

Here is a general breakdown of occupation classes. Class 1 and 2 include heavy physical labor such as construction, roofing, and logging. Class 3 covers moderate physical work like nursing, electrical work, and plumbing. Class 4 includes light physical or mixed jobs like sales with travel, teaching, or real estate. Class 5 and 6 cover primarily desk-based professional work such as accounting, law, software engineering, and corporate management.

Typical Costs by Income Level

To give you a sense of what disability insurance might cost at different income levels, here are some general ranges. These assume a 35-year-old applicant in good health with a 90-day elimination period and a benefit period to age 65. Actual costs will vary based on your occupation class, state, and chosen insurer.

• $40,000 annual income: Approximately $400 to $1,200 per year, or $33 to $100 per month. A policy might provide around $2,000 to $2,400 per month in benefits.
• $60,000 annual income: Approximately $600 to $1,800 per year, or $50 to $150 per month. Benefits might range from $3,000 to $3,600 per month.
• $100,000 annual income: Approximately $1,000 to $3,000 per year, or $83 to $250 per month. Benefits might range from $5,000 to $6,000 per month.
• $150,000 annual income: Approximately $1,500 to $4,500 per year, or $125 to $375 per month. Benefits might range from $7,500 to $9,000 per month.

These ranges represent individual policies. If your occupation is classified as high risk, expect costs toward the upper end. If you are in a low-risk desk job, costs will tend toward the lower end. Adding riders like cost-of-living adjustment or future increase options will push the premium higher by 10 to 30 percent.

Group vs. Individual Pricing

If your employer offers group long-term disability insurance, it is typically the most affordable way to get basic coverage. Many employers pay part or all of the premium. Even when the employee pays the full cost, group rates are usually lower than individual rates because the insurer spreads risk across the entire group and administrative costs are lower.

However, group coverage has important cost-related trade-offs. If your employer pays the premium, the disability benefits you receive are taxable income. A policy that replaces 60 percent of your salary looks generous on paper, but after federal and state income taxes, your actual take-home might be closer to 40 percent of your pre-disability salary. That is a significant reduction from what you may be counting on.

Individual policies cost more, but the benefits are tax-free if you pay the premiums with after-tax dollars. An individual policy also stays with you if you change jobs, gives you more control over policy features, and can provide true own-occupation coverage. Many financial advisors recommend using group coverage as a foundation and supplementing it with an individual policy to close the gaps.

How to Reduce Your Disability Insurance Cost

There are several practical strategies to lower your disability insurance premium without leaving yourself unprotected. The key is understanding which adjustments reduce your cost and which reduce your actual coverage in ways that could hurt you later.

• Choose a longer elimination period: Extending your elimination period from 90 days to 180 days can reduce your premium by 15 to 25 percent. This works well if you have an emergency fund that can cover expenses during the waiting period. Think of it like choosing a higher deductible on your car insurance.
• Select a shorter benefit period: A 5-year benefit period costs less than a to-age-65 benefit period. However, this is a trade-off that requires careful thought. If you become permanently disabled, a 5-year benefit period ends well before retirement, leaving you without income replacement. Most advisors recommend a to-age-65 benefit period unless the premium is simply out of reach.
• Buy when you are young and healthy: A non-cancelable policy purchased at age 28 locks in rates that are significantly lower than what you would pay at age 40 or 50. Your health is also more likely to be clean in your 20s and 30s, which helps you avoid exclusion riders or surcharges.
• Take advantage of employer group coverage: If your employer offers group disability insurance, enroll in it even if the coverage has limitations. Use the group plan as your base and buy a smaller individual policy to supplement it. This layered approach is often more affordable than buying a large individual policy alone.
• Shop multiple companies: Premiums vary across insurers, and different companies classify the same occupation differently. Getting quotes from three to five carriers, or working with an independent agent who represents multiple companies, can help you find the most competitive rate for your situation.
• Be strategic with riders: Riders add valuable features but also add cost. A cost-of-living adjustment rider is most valuable if you are young and could be on claim for decades. A future increase option rider is most valuable if your income is expected to grow. Choose the riders that match your specific situation rather than adding every available option.

The Cost of Not Having Disability Insurance

When evaluating whether disability insurance is worth the cost, it helps to consider the alternative. What happens financially if you become disabled and have no coverage beyond Social Security?

The average SSDI benefit in 2026 is approximately $1,630 per month. For a worker earning $60,000 per year, that replaces only about 33 percent of gross income. And qualifying for SSDI is difficult. The program requires total disability, has a mandatory 5-month waiting period, and denies a large percentage of initial applications. Even if you are eventually approved, you could go months or years without income during the appeals process.

The Social Security Administration reports that more than 1 in 4 of today's 20-year-olds will experience a disability before reaching age 67. The leading causes are not dramatic accidents. They are musculoskeletal disorders, cancer, cardiovascular conditions, and mental health disorders. These are conditions that can affect anyone at any age and in any occupation.

Consider the math. A person earning $60,000 per year with 25 working years remaining has a potential lifetime earning power of $1.5 million or more, not counting raises. A disability insurance policy costing $1,200 per year represents a total investment of $30,000 over those 25 years. That $30,000 protects $1.5 million in income. Viewed as a ratio, it is a relatively small cost for a very large amount of protection.

How Benefit Amount and Benefit Period Affect Cost

The monthly benefit amount you select directly affects your premium. Most insurers allow you to replace up to 60 to 70 percent of your gross income. A $5,000 per month benefit costs roughly twice as much as a $2,500 per month benefit. When choosing a benefit amount, think about your actual monthly expenses rather than a percentage of income. If your essential expenses including housing, food, utilities, insurance, and debt payments total $3,500 per month, a $4,000 monthly benefit may provide enough cushion without paying for more coverage than you need.

The benefit period is how long the policy pays if you remain disabled. Common options include 2 years, 5 years, 10 years, and to age 65. A 2-year benefit period costs significantly less than a to-age-65 period. However, according to the Social Security Administration, disabilities that last longer than 12 months have a high likelihood of lasting 5 years or more. A shorter benefit period saves money upfront but creates risk if your disability outlasts the policy. For most working-age adults, a to-age-65 benefit period provides the most complete protection.

Next Steps: Finding Your Price

The best way to find out exactly what disability insurance will cost for your situation is to get quotes from multiple providers. Each insurer prices policies differently, and your specific occupation, health, and coverage preferences will affect the final number. An independent insurance agent can help you compare options. Our guide to the best disability insurance companies can help you evaluate which carriers are worth considering.

Before you start shopping, make sure you understand how much disability insurance you actually need. And if you are still unsure whether this coverage is right for you, our guide on whether you need disability insurance walks through the decision framework step by step.

Disability insurance is an investment in financial stability. The premium you pay today is a fraction of the income it protects over your career. By understanding the factors that drive cost and using the strategies outlined above, you can find a policy that fits your budget while giving you the protection your income deserves.