Disability Insurance Rates

Your Guide for Choosing Your Disability Insurance Rates

When you’re shopping for disability insurance rates, you want to make certain you are aware of the different rating factors that insurance companies use. Another thing that you are going to find in your shopping is that the information you receive either over the phone or on the Internet are just quotes, and the company is not bound to those rates when you actually purchase the policy. In most cases, it should be close, provided that you have given the insurance company the correct information. For example, if you originally said that you don’t smoke, and when you take out the policy, you tell the agent that you do smoke, that is going to affect the premium since insurance companies know that smokers lose more time from work than non-smokers do for both long and short-term disabilities. To receive the most accurate quote, provide the most accurate information when you make your request.

Know the Rating Factors

Before you begin to seek a quote for any kind of insurance, you should become aware of the rating factors that insurance companies use. These will differ from state to state, and from carrier to carrier, but if you are cognizant of some of them, you at least have an idea what to expect.

• Do you smoke?
• What kind of job do you have?
• Do you participate in dangerous activities (firefighting, police officer, scuba diving, ride a motorcycle, etc.)?
• Is there a family history of high blood pressure, heart disease, cancer, and other genetic disorders?
• Are you overweight?
• Do you exercise regularly?

These are some of the more common factors that insurance companies use to set a rate for your premiums. Some states are even allowing the inclusion of your credit report as a rating factor, though most people disagree with this practice, feeling it infringes on their right to privacy and has nothing to do with their potential for filing a claim. Insurance companies, however, claim to have done statistical studies that prove people with bad credit file more claims.

Other Factors that Determine Disability Insurance Rates

Aside from the rating factors that insurance companies use to provide a rate, other factors are also considered. With disability insurance, one of the most important factors is the amount of money you want, the length of time you want it to continue, and when you want it to begin. With short-term disability, if you know that your employer is going to pay you for the first week after illness or injury, you don’t need to take a short-term disability policy that will start on the first day – a longer waiting period will reduce the premiums. In addition, if your normally take home pay is $400 weekly, you don’t want to take short-term disability that pays $500 weekly just to get some extra cash because your premium will also be based on the amount of your distribution. Be reasonable in your request, and you will indeed save yourself money in premiums.

Pre-Existing Conditions

Unfortunately, in most cases an insurance company will not pay benefits that are related to a condition that you had prior to the inception of the policy. Some companies may pay for the condition after a waiting period, and others will not cover it at all, so you want to make sure of that before you take out the policy. Although this process is more common with health insurance, it exists to a lesser degree among the short and long-term disability policies. Make sure you know the carrier’s policy before you purchase it if you have a chronic illness.