How to save on disability insurance

Extend the waiting time before your pay-out to slash premiums now

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Q. Help! I am 27, single and I earn $120,000 per year at two part time jobs. I do not have health benefits or disability with my employers. I really need some good advice on disability insurance.  I have been quoted $165  per month and feel that is a lot of money for just disability insurance. Is this the going rate or can I get cheaper disability insurance than this?  I live in Ontario. Thank you in advance.

—Alana McCabe, via email

A. There are many variables that go into determining the premium on your disability policy—your date of birth, gender, smoking status and occupation all help determine the price. But some insurance companies price certain occupations differently so make sure you shop around.

The other variables that affect your premium are the elimination period, the benefit period and the monthly benefit amount. You can also add a slew of riders to the policy some good and some not so good that can hike up your premium. For instance, a Return of Premium feature can add as much as 50% to your monthly cost and returns a portion (or sometimes all) of the premium provided the insured does not make a disability claim or only claims up to a certain amount. You have to determine if these riders are truly necessary. Remember, the most important thing you want from your disability insurance policy is that you are able to maintain your current standard of living if you are unable to work due to an injury or illness.

A key way to lower your premiums is by choosing a longer Elimination Period. The Elimination Period is the length of time you have to wait until your disability insurance policy starts paying out. A 30-Day Elimination Period translates into a much higher premium than a 90-Day Elimination Period.  Lengthening the elimination period is a good way to lower your cost because it is the long term disabilities and not the short term disabilities that have the biggest impact on you financially.

Ask an Insurance Expert: Leave your question for Lorne Marr »
Lorne Marr, is the founder of LSM Insurance, an independent Canadian Life Insurance Brokerage company in Markham, Ont.

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