Innovate to Meet Growing Consumer Demand for Disability Coverage

Innovation brought on by InsurTechs makes the insurance process stress-free and completely online, and it gives consumers more flexibility than ever before to see if they should be changing their policies.

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May was Disability Insurance Awareness Month and when it comes to disability insurance, the standard rule to follow is that the annual premium will be between 1 percent and 3 percent of a policyholder’s annual income. But there’s more in-depth research than that.

Average Quoted Cost of Long Term Disability Insurance

The average quoted long term disability insurance annual premium in 2021 was $1,297, or $108.11 monthly. This was up from 2020’s average annual quoted premium of $1,084 ($90.33 monthly), but that will be explained later.

By age, there was a big-time difference in the annual cost of long term disability insurance. For example, the average annual cost in 2021 for the 18-24 age group was $451 compared to $1,642 for the 55-64 age group. Clearly, it can be a big-time financial advantage to buy disability insurance at a younger age.

In between those two figures, the annual premium was $863 for the 25-34 group, $1,354 for the 35-44 age group, and $1,800 for the 45-54 cohort.

When looking at the average annual quoted premium by gender in 2021, the figure was $1,258 for males and $1,352 for females. This falls in line with historical data that suggests women suffer career-altering disabilities more often than men.

And finally, a quick look at how occupation will impact the price of disability insurance. Occupations that got the lowest long term disability insurance quotes in 2021 included drivers ($509), customer service reps ($619), and teachers ($744). On the other hand, occupations that saw the highest quoted premiums included physicians ($3,027), dentists ($2,460), and IT consultants ($1,876).

Now as mentioned earlier, the average annual long term disability insurance premium did increase from 2020 to 2021, but that can be explained by consumers also seeking increased coverage during this time period. Between 2020 and 2021, Consumers Sought a 23 percent Larger disability insurance benefit

Just as consumers sought increased life insurance coverage between 2020 and 2021, they sought more disability insurance coverage. In 2020, the average quoted monthly benefit for long term disability insurance was $2,561. In 2021, the average quoted monthly benefit surged 23% year-over-year to $3,151.


One logical explanation would be the coronavirus pandemic and its impact on consumer behavior. Unfortunately, severe illness and death became omnipresent due to COVID-19, and it changed the way people thought about life. Suddenly, these terrible things became very real possibilities, and consumers wanted to cast larger financial safety nets in case of the worst.

In summation, peace of mind was found through larger insurance coverage for products like life or disability insurance. But other than that, the desire for more insurance coverage could also be attributed to the advent of InsurTechs and how they have innovated the insurance process.

InsurTechs Make Comparing Insurance Coverage Simple

Innovation brought on by new age InsurTechs makes the insurance process stress-free and completely online, and it gives consumers more flexibility than ever before to see if they should be changing their policies. From quote to application to underwriting to approval, InsurTechs have made the process streamlined like never before and it gives consumers options.

A study by reMark found most consumers increased their life insurance coverage in 2021 for absolutely no specific reason. The next most cited reason was a recommendation from friends or family.

So maybe it’s best just not to overthink why consumers are increasing their coverage for products like disability insurance. This is because today’s process to change that coverage doesn’t require too much effort either. Maybe consumers heard from a niece or nephew that recently bought insurance from an InsurTech about how easy the process is. Their response, “OK, maybe I should check that out for myself and compare it to what I have now.” Or maybe they had 30 minutes of downtime at work and saw an ad from an InsurTech to compare their coverage options. That would be all the time they need to get a quote and apply with that InsurTech.

Before, changing insurance coverage would have been a cumbersome process that took weeks or even months and probably not even worth the effort. But now, comparing your coverage is easier than ever before and only requires an internet connection and a couple of spare minutes. Why not see what you can get out there?

It’s an extremely positive development for insurance consumers and what’s better is that there is still more room to simplify the process.

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Mike Brown // Mike Brown is the Director of Communications at Breeze, an InsurTech simplifying how disability insurance is bought and sold.

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