Disability insurance benefit period

Share this post

Disability insurance benefit period

Benefit period definition

The disability insurance benefit period is the length of time that benefits will be paid while you are on a disability claim. Benefits begin at the end of the month after you have satisfied the elimination period and will be paid until the end of the benefit period. The most common choices are two years, five years, and to age 65. Note that this is the maximum benefit period for a claim. If the duration of the disability is shorter than the benefit period chosen, then payments will stop when the disability ceases.

On the other hand, if the duration of the disability exceeds the length of the chosen benefit period, the payments will stop at the end of the benefit period. A 30 year old who is disabled until age 65 but chooses a benefit period of five years will not receive any payments from his policy for the 30 years after age 35. Unless the benefit to age 65 option is chosen, your risk exposure to extremely long-term or permanent disabilities is increased.

The benefit period applies for a single disability claim, and because multiple claims are possible under a single disability insurance policy, the benefit period will restart for each new claim. For example, take a policy with a two year benefit period. If you are disabled for three years, return to work for ten years, and are disabled again for another three years, then you can make a claim of two years for each of your disabilities.

Remember from the last week’s post that disabilities that recur within 6 or 12 months (number of months depends on the policy) is considered one disability. Therefore, the second period of absence from work is considered a continuation of the first period, and the entire claim shares one benefit period. This is referred to as a recurrent disability.

One of the advantages of an individual disability insurance policy is the choices available, which provides a greater ability to balance cost and features than any other type of insurance policy. The choice of benefit period is no exception, and may be one of the tougher ones to strike a balance.

To give you an idea of how much a policy with each benefit period costs, see the tables below.

Monthly premium for a male non-smoker with annual earnings of $50,500, who is eligible for $3,000 of non-taxable monthly benefit. Occupation class 4A, 120 day elimination period, premium level and guaranteed until age 65. Quote from RBC Insurance's Professional Series. Rates are current as of May, 2015.
AgeTwo yearsFive yearsTo age 65
25$27.51$34.10$45.36
30$27.75$35.86$49.93
35$29.27$41.71$60.40
40$34.52$53.29$76.62
45$44.18$69.38$95.50
50$62.66$97.83$124.43
55$92.98$140.18$162.12
60$174.67$205.46$205.46
Monthly premium for a female non-smoker with annual earnings of $50,500, who is eligible for $3,000 of non-taxable monthly benefit. Occupation class 4A, 120 day elimination period, premium level and guaranteed until age 65. Quote from RBC Insurance's Professional Series. Rates are current as of May, 2015.
AgeTwo yearsFive yearsTo age 65
25$44.28$54.89$73.03
30$51.32$66.33$92.37
35$54.84$78.15$113.16
40$59.12$91.25$131.17
45$67.59$106.16$146.11
50$83.06$129.68$164.90
55$110.91$167.21$193.38
60$203.23$239.06$239.06

The average disability that exceeds 90 days lasts almost three years (1), so the least expensive two year benefit period option will likely not be enough when a claim arises. Although the five year benefit period provides for benefits longer than the average disability, it still does not completely protect from extremely long-term and permanent disabilities. Only by having benefits paid to age 65 does one receive complete protection from these types of disabilities. But the most comprehensive option can be more than twice as expensive than the two year option, reiterating how difficult the choice may be.


1. Disability probability based on the 1985 Commissioner’s Individual Disability Table A gender distinct incidence tables for Occupation class 2A, 90 day waiting period.

Image courtesy of anankkml / FreeDigitalPhotos.net