Disability Policy FAQs

How much does a long term disability policy cost?

There are a number of factors that are considered in the cost of a long term disability policy.  Below covers most of the factors used to determine the policy costs.

  • Your Age
  • Gender
  • Tobacco Use
  • State you live in
  • Your Occupation
  • The Benefit Period – How long your policy will provide benefits (1 yr, 2 yrs, 5 yrs, 10 yrs, Until 65, Until 67, etc.)
  • Elimination Period – Waiting period before benefits begin to pay (see below)
  • Coverage Amount – The Monthly Benefit Amount, which is based off of your monthly income
  • Any additional policy features or riders


What is an Elimination Period?

Think of this like a deductible but instead of a dollar amount it’s based on time.  It’s the waiting period that starts the day you become ill or injured until your benefits benefits begin.

A typical elimination period for a long term disability policy is 90 days, but can be shorter or longer depending on the company’s policy.  The shorter the elimination period the more the policy will usually cost, and a longer elimination period will typically lower the cost of the policy premiums.

Are Disability Insurance Benefits Considered Taxable Income?

Well it depends on type of benefits you are receiving, were the premiums paid with before or after tax dollars, and who paid the policy premiums (an employer or you personally).

Since this can get a little complicated you may want to double check with your accountant or here are some additional resources with more detailed information.

  1. IRS Question? Is the long-term disability I am receiving considered taxable?
  2. Tax planning tips: Disability Insurance