Long-term disability insurance typically costs 1% to 3% of your income. On a $90,000 salary that's roughly $75 to $225 a month for a policy paying $4,500 a month, tax-free, if you can't work. Where you land in that range comes down to five levers, and you control three of them.
Insurers price disability coverage on how likely you are to file a claim and how long that claim would run. Five factors do almost all the work. Two of them, age and occupation, are facts about you. The other three, elimination period, benefit period, and replacement percentage, are choices you make on the application.
Age is the steepest curve: a buyer at 55 pays roughly 2.3 times what a buyer under 35 pays for the identical policy. Occupation comes next: insurers sort jobs into classes, and a desk worker can pay half of what a roofer pays because back injuries and falls don't happen at keyboards. Then come the design choices. The elimination period is the wait before benefits start, the benefit period is how long they can last, and the replacement percentage is how much of your income the policy covers, usually 60%.
Here's how each factor moves the annual premium for a $90,000 earner whose baseline policy, age 35 to 44, 90-day wait, benefits to 65, skilled trade, runs about $1,800 a year:
| Factor | Cheap End | Expensive End | Swing |
|---|---|---|---|
| Age at purchase | Under 35: about $1,350 | 55+: about $3,060 | 2.3× |
| Occupation class | Office work: about $1,260 | High-risk trades: about $2,790 | 2.2× |
| Elimination period | 365-day wait: about $1,296 | 30-day wait: about $2,430 | 1.9× |
| Benefit period | 2-year cap: about $990 | To age 65: about $1,800 | 1.8× |
Stack the wrong end of every lever and the premium tops $6,000 a year. Stack the cheap end and it falls under $400. One average figure can't describe that spread.
Start with the standard offer: 60% of gross income. That sounds like a big pay cut until you remember taxes. Benefits from a policy you paid for with after-tax dollars arrive tax-free, and for most earners, 60% of gross lands surprisingly close to normal take-home pay. Check what you actually keep of your paycheck today with the salary calculator, then compare.
Two caps to know about. Insurers rarely sell more than 70% replacement, because a policy that pays as much as working removes the incentive to recover. And most companies cap the monthly benefit around $20,000 to $25,000 regardless of income, which only matters once you're earning past roughly $400,000.
Disability coverage also pairs with life insurance rather than replacing it. Life insurance protects your family if you die; disability insurance protects everyone, you included, if you live but can't earn. Statistically the second risk is larger during your working years. If you're sizing both at once, the life insurance needs calculator handles the other half.
Enter your income, age band, occupation, and waiting period. The calculator shows your monthly benefit and a realistic premium range.
Disability Insurance Calculator →If your employer offers long-term disability, take it: it's usually free or nearly free, with no medical underwriting. But know its three weaknesses before deciding it's enough.
First, taxes. When the employer pays the premium, the benefits are taxable income. A 60% group benefit can shrink to something like 45% of gross after withholding. Second, portability: group coverage ends when the job does, and if you leave at 50 with a health condition, replacing it individually gets expensive or impossible. Third, the fine print. Many group plans switch from "can't do your own job" to "can't do any job" after 24 months of benefits, which is a much harder standard to meet.
An individual policy flips all three. You pay with after-tax dollars so benefits come tax-free, the policy follows you between jobs, and you can buy an own-occupation definition that pays if you can't do your specific work. The trade is that you pay the 1% to 3% yourself. A common middle path is keeping the group plan as the base layer and adding a smaller individual policy to cover the tax gap and the portability risk.
Four moves, in order of how well they work:
One thing not to trim: the replacement percentage. Dropping from 60% to 40% saves a third of the premium but turns a survivable event into a slow financial bleed.
For an individual policy, no. That's the good news in disguise: because you pay with after-tax dollars, the benefits arrive tax-free. Flip it around and the logic holds too. When an employer pays the premium as a business expense, the benefit checks are taxable income, which can shave a 60% benefit down to roughly 45% of gross pay.
Using the 1% to 3% of income pattern, expect $1,000 to $3,000 a year, or about $83 to $250 a month. A 30-year-old in an office job lands near the low end; a 50-year-old in physical work lands near the high end. The policy would pay $5,000 a month at 60% replacement.
No. Disability insurance pays when a documented medical condition stops you from working, not when you're laid off or fired. Job loss is unemployment insurance territory. The two get confused because both replace income, but the triggers are completely different and insurers verify claims with medical records.
As long as you stay disabled, up to the benefit period you chose: 2, 5, or 10 years, or to age 65. Most claims end well before the cap. The average long-term disability claim runs around 3 years, which is why the benefit period discount for a 5-year cap looks tempting. The catch is that the rare 20-year claim is exactly the disaster the policy exists for.