How Much Does Short-Term Disability Cost?

You can expect to spend about 1% to 3% of your annual income, on average, on short-term disability insurance. But your individual rate will depend on factors such as your age, health, occupation, and the policy features you choose. While short-term disability insurance isn’t as cost-effective or essential as long-term disability insurance, it is worth the expense for some families. We’ll cover the factors influencing your premiums and how you can save money on short-term disability coverage. 

Short-Term Disability Insurance Quotes

Short-term disability insurance generally costs between 1% and 3% of your income if you buy an individual plan. However, a variety of factors will influence your individual rate. We collected sample quotes from Assurity for a 26-week benefit period with a 14-day elimination period, so you can get a sense of what you’ll pay based on your age and occupation. Quotes are for nonsmoking individuals in excellent health living in Texas. 

Popular Short-Term Disability Companies

• Breeze
• Principal
• MassMutual
• Mutual of Omaha
• Assurity
• Guardian
• The Standard
• Ameritas

Factors Influencing Cost

The cost of a short-term disability policy varies depending on individual factors as well as the company and policy you choose. When determining your short-term disability insurance premiums, insurers consider the following:

Age and Gender

Since your health declines with age and your risk of facing a disability increases, older people will pay more for short-term disability insurance than younger folks. Young women will also pay higher premiums than young men, since women file more claims for issues such as mental health and pregnancy. But rates for men increase faster with age than rates for women. 

Health and Smoking Status

If you smoke, have certain health conditions, or have a family history of chronic disease, you’ll pay more for short-term disability insurance than if you were a healthy nonsmoker. That’s because poor health puts you at a greater risk of filing a claim. 

Job and Hobbies

People who work in high-risk occupations, such as commercial truck driving or construction work, are more likely to become injured or ill on-the-job. For this reason, insurance companies generally charge manual laborers more than office workers. Most insurance companies use several different occupation classes to determine premiums, so even among white-collar jobs, there can be premium differences. Similarly, high-risk recreational activities like skydiving also result in higher rates. 

Policy Features

Your policy choices will also impact your monthly cost. You’ll need to select the following during the application process:

• Own-occupation vs any-occupation coverage: Own-occupation coverage is more comprehensive and expensive. It provides monthly benefits if you become disabled and can no longer work in your current job. Any-occupation coverage, on the other hand, only kicks in if your disability prevents you from working any job at all. 
• Benefit amount: Most insurers allow you to purchase up to 60% of your income in short-term disability coverage. The higher the monthly benefit amount you choose, the more costly your premiums will be. 
• Elimination period: Short-term disability policies typically come with a waiting period, or elimination period, between 7 and 30 days. A longer elimination period can save you money. 
• Benefit period: The length of the benefit period you choose will also impact your premiums. You can find short-term disability policies that last anywhere from three months to two years after your elimination period has ended. 
• Riders: Some policies may include special features, such as locked-in rates or the option to buy more coverage later on, while some companies may offer these benefits as endorsements for an additional premium. You can even get a residual benefits rider that pays partial benefits for a partial disability, but bear in mind that most add-ons will increase your premiums. 

How to Save Money on Short-Term Disability Insurance

There are a few ways you can reduce your short-term disability insurance premiums, and one way you can cut the cost altogether. 

• Buy when you’re young and healthy: Since younger folks pay less for disability insurance, buying a noncancelable policy while you’re young can save you money. 
• Boost your savings and rely on a long-term policy instead: Short-term disability insurance gets you less bang for your buck than a long-term policy. If you can build an emergency fund worth one to three months of your income, you can rely on your long-term disability insurance policy to cover you if you’re unable to work for longer than that. 
• Choose a longer elimination period: Selecting an elimination period of 30 days can help you reduce your short-term disability insurance premiums. 
• Choose a shorter benefit period: Selecting a shorter period of coverage will save you money on your premiums. However, you’ll run the risk of being without income if your disability lasts longer. 
• Choose a lower coverage amount: If you think you could live on a stricter budget after your disability diagnosis, consider opting for less in monthly benefits to reduce your premiums.