Purchase Your Policies

Many employers offer group coverage without a medical exam if you sign up during the initial enrollment period. Some preexisting conditions may be excluded from group coverage for up to two years. Group DI is generally less expensive than an individual policy because most employers pay a portion of the premium. Some plans have a portability option that allows you to convert your group coverage to an individual policy when you leave your job.

You can purchase individual disability insurance directly from an insurance company or through an insurance broker. Unlike group insurance, you have to go through underwriting to get the policy. One of the greatest benefits of individual DI is that changes in your health, employment, or occupational class don’t affect your coverage after the policy is issued. Even if you become uninsurable in the future or switch to a risky occupation, your individual policy remains in force as long as you keep paying the premiums.

The higher the chance you could become disabled and the larger the benefit, the higher the premium. To see all the factors that go into it, check out the following chart:

Factor	How It Affects the Premium
Age	Premiums increase with age.
Gender	Women are at greater risk of disability than men, so their premiums are higher.
Occupation	Riskier occupations have higher premiums.
Elimination period	You get your money faster with a shorter elimination period, but you also pay a higher premium.
Benefit amount	The more the potential benefit amount, the higher the premium.
Riders	Adding riders increases the premium.
Definition of disability	Policies with more favorable definitions of disability (for instance, own occupation) have higher premiums than policies with less favorable definitions.
Renewability provision	The more guarantees about renewability, the higher the premium. (For instance, a noncancelable and guaranteed renewable policy has a higher premium than a conditionally renewable policy.)

Don’t forget about taxes! If you pay the premiums for your policy, the benefits you receive are generally tax-free. If your employer paid part or all of the premiums, part or all of the benefits are taxable.