This post is part of an ongoing series designed to highlight specific occupations and disability insurance. All professions have different job risks and income so pricing on disability insurance policies vary. Disability insurance for nurses is no different. If you’re a nurse looking to purchase disability insurance to protect some or most of your income, then read on to learn more. You can always use the quote form on the left or chat with us to answer more specific questions.
How Is Disability Insurance for Nurses Priced?
The cost of a disability insurance policy that covers 65% of your income (which is normally the maximum…remember, if you pay the premiums with after-tax dollars, then the benefits are tax-free) is typically 1-4% of your income.
There are four main factors that contribute to the overall pricing of your policy: your occupation, your age, your gender, and your health. We will explore each factor and, at the end of the article, offer pricing examples.
If you’re on this page, then you’re likely a nurse looking for disability insurance.
Almost all disability policies have different classifications based on your occupation. These classifications (called occupation classes or “occ classes”) directly affect your policy cost and benefits.
Disability insurance for nurses has several occupation classes. The class you fall into is determined by what type of nurse you are and the setting in which you provide care.
In addition, the occupation classes differ from insurance carrier to insurance carrier. For instance, one company may have a higher occupation class (meaning lower premiums for the same benefits) for a specific nursing type than another. Therefore, it is crucial you shop the available insurance companies that offer disability insurance for nurses.
We can help with that. Contact us today or simply fill out the quote form on the right.
Now, let’s look at a few examples.
If you’re a nurse practitioner, then you’re in luck! Disability insurance for nurses that are nurse practitioners has the highest occupation class available.
That means, if you compare a policy between a nurse practitioner and a registered nurse with identical benefits, the nurse practitioner’s policy will be less expensive.
Slightly lower in classification than a nurse practitioner, a nurse anesthetist still has very favorable occupation classes available. Disability insurance for nurses rarely classifies nursing specialties, but the nurse anesthetist is an exception.
This is good news since, as you’ll see below, working in a hospital setting is typically a cause for higher disability insurance premiums (because of a lower occupation class). A nurse anesthetist can secure preferential pricing due to his or her specialty.
A registered nurse is the most “in demand” nursing type at the time of this article’s publication. If you’re a registered nurse, you know there are many settings in which you can provide care.
An RN who has mainly supervisory or administrative duties can be eligible for the same occupation class as a nurse anesthetist. A registered nurse working in a doctor’s office can also qualify for the same class.
A floor nurse or any nurse providing primary care in a hospital setting will typically have a lower occupation class. The good news is that, with a few exceptions, most disability insurance for nurses still has attractive pricing.
Licensed Practical Nurse
An LPN or LVN will have an “occ class” similar to that of a floor nurse/RN giving primary care. Again, while these aren’t the least expensive policies, they can still be very affordable. However, it is very important you shop around since pricing can differ greatly from one insurance company to the next. We help you find the best policy for your needs. It’s what we do.
Your Age and Gender
Disability insurance takes your age and gender into account when pricing your policy, and disability insurance for nurses is no different.
As a simple rule of thumb, the younger you are, the less expensive your policy. Most disability insurance policies are offered to age 60, with some going to age 64. We also have a carrier that writes up to age 70; however, the premiums for a policy at that age become prohibitive.
Women pay more for disability insurance than men. Unlike life insurance, where women typically see a relatively large price break versus their male counterparts, disability insurance charges women more.
The factors that go into pricing your policy come down to the likelihood that you’ll make a claim.
Nurse practitioners make fewer claims than floor nurses.
Younger people make fewer claims than older people.
Women make more claims than men.
It’s that simple.
There are two ways to offset this pricing issue, specifically if you’re female.
First, you can get group coverage. Group has substantial discounts and prices the population as opposed to the individual, allowing you to get more benefit for your premium dollar.
If group coverage isn’t available, you can consider a multi-life policy. If you don’t have disability insurance benefits through work, then your co-workers probably don’t either.
While the specifics vary from company to company, a multi-life policy involves 3 or more people from a common employer purchasing individual disability insurance policies.
Let’s say you are a woman and want to purchase disability insurance for nurses. With a few other co-workers (male or female, irrespective of their occupation), who also want to buy disability insurance, not only can you get a substantial group discount but you can also get unisex pricing.
Securing a policy in this manner (using a multi-life option) can save a female applicant over 40% in premium costs.
If you’d like to move forward, but your coworkers are dragging their feet, you can also purchase your own policy and then have the discount applied in future years (as soon as your coworkers purchase their disability insurance from the same carrier).
In all disability insurance policies, your health plays a critical role in your policy’s price. Unlike life insurance, which has several health classifications, disability insurance has only a few different health ratings.
Healthy people will be rated standard (usually).
There are separate classifications for tobacco users, but don’t worry if you like to catch the occasional smoke break; you’re still insurable.
If you have one or several health conditions, don’t despair. You can still be eligible for disability insurance for nurses.
The disability insurance companies have two pricing/claims structures at their disposal to offer you a policy, even with health issues: ratings and exclusions.
Disability insurance companies use ratings to increase your policy cost if you have a health condition that can cause additional health problems.
Being overweight can cause a rating, as can an illness such as diabetes. Ratings increase your premiums and can make you ineligible for certain benefits.
For example, someone who is rated may pay 50% more than someone who isn’t and may be only eligible to purchase a policy that allows them to be on claim for 5 years as opposed to age 65.
Specific health conditions, such as depression, arthritis, or back pain, are often not rated but excluded.
An exclusion is part of your policy and states the carrier will not pay claims for disability arising from the excluded condition.
For some people, this is a deal breaker, and the only reason they were pursuing the policy in the first place.
Others realize, if there are 100 conditions that can cause you to miss work for an extended period and one of them will not be covered whether or not you purchase the policy, then you should do everything you can to protect your paycheck from the other 99 health conditions.
Ratings and exclusions vary from company to company. Where one company might have a rating for a certain build (height/weight), another might issue a policy as standard. A health condition may require a permanent exclusion with one company, where a competitor would offer a temporary exclusion with reconsideration.
So, let’s look at two hypothetical scenarios.
In the first, we’ll compare a 40-year-old nurse practitioner to a 40-year-old hospital floor nurse, so you can see how the varying occupation classes affect the cost of disability insurance for nurses.
In the second, we’ll compare two nurse practitioners, one who is 35 years old and another who is 45.
For comparison, we are using the same disability insurance company and assuming the nurses are female. We are also using the same riders and benefits, which include own occupation coverage and residual disability. Finally, we’ll assume 80k in income for all examples (although it isn’t likely these comparisons would be making the same income, it is necessary to do a true apples-to-apples comparison) and that we use the maximum allowable coverage.
Depending on the carrier and policy design we select, your premium may be higher or lower than these examples.
Nurse Practitioner versus Registered Nurse (Floor Nurse)
Disability insurance for nurses can have a lot of moving parts, but for this comparison, we have isolated only the occupation class, since everything else is identical.
A 40-year-old female nurse practitioner earning 80k annually could purchase a disability insurance policy for $218 per month. This policy would include own occupation coverage, partial disability benefits, benefits until age 65, and replace up to $4,200 per month, tax-free, should she go on claim.
Using that same policy design, a registered nurse providing primary care would pay $360 per month, a substantial increase.
To help alleviate higher costs, we will typically reduce benefits and eliminate riders.
For instance, we might drop the pure own occupation coverage to a modified version, eliminate a rider like unlimited mental/nervous coverage, and take a basic (instead of enhanced) definition of partial disability. Also, we can reduce the total benefits to $3,350 per month from $4,200.
The result: monthly premiums of $220 for the registered nurse. This policy still has a lot of benefits should she no longer be able to do her job. The right mix of costs and benefits when purchasing disability insurance for nurses is important. We are here to help.
35-Year-Old Nurse Practitioner versus 45-Year-Old Nurse Practitioner
Using the same benefit design as the 40-year-old nurse in our earlier example, let’s see how age affects your disability insurance premiums.
At age 35, that same policy costs $183 per month. At age 45, the premiums are $253 per month.
Most disability insurance policies are guaranteed renewable, meaning the company can’t cancel your policy once you buy it. We also help nurses purchase policies that are non-cancelable, which means the disability insurance company cannot cancel your policy, and they can’t raise the premium.
Buy your coverage when you’re young. Not only will your paycheck be covered from the unexpected, but your premiums will be much lower than if you wait.
Disability insurance for nurses is unique because there are so many sub-classifications of the occupation.
What is important for you, regardless of your nursing type or specialty, is that you work with an agency that understands your needs and circumstances. We specialize in helping members of the medical profession purchase the best disability insurance policies for their goals.
We provide expert, unbiased advice in helping you shop for disability insurance. Being independent allows us to use almost any carrier that fits your situation.
At High Income Protection, we will guide you from start to finish. Our process is designed to help you understand your coverage, any potential tradeoffs, and which policy is best for you.
Contact us today for a complimentary consultation.