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How can I reduce the cost of disability insurance?

Start by finding out if you're eligible for disability benefits from a group disability insurance plan. For the most part, group insurance is less expensive than individual policies. Keep in mind, however, that group insurance offers fewer and less flexible benefits. You'll want to check with your employer, insurance agent, professional association, or state insurance department to find out what group plans you're eligible for.

If group disability insurance is not available to you or if you need additional coverage, there are several strategies you can use to make individual disability coverage more affordable:

  • Lower the monthly benefit you would receive if you became disabled. Most disability income insurance policies offer a range of benefit amounts that you can choose from.
  • Increase the waiting period before benefits begin to match up with a short-term disability policy. Waiting periods can range anywhere from one month to several years. If you decide to lengthen the waiting period, commit yourself to establishing an emergency cash fund that will cover your expenses during that time.
  • Check your policy to see if you're paying for any optional coverages you could do without and can omit from your policy.
  • Shorten your benefit period. Typical benefit periods include one, two, five years, and up. However, exercise caution. This strategy may be the least cost effective if your benefits stop before your disability ends.

Note: Before you make a decision on disability insurance, review your financial situation to see how much coverage you need. One of the dangers in trying to reduce the cost of disability insurance is that you'll end up with a policy that doesn't adequately protect you. So always buy the best coverage you can afford. Sometimes, however, it comes down to this: Either you buy no disability insurance or you buy a low-cost policy. In this case, any coverage you buy is better than no coverage.