Disability insurance for accountants

You can crunch numbers in your sleep. Naturally, few better understand the financial impact of disability than you.
Read Time
3 mins

An accounting degree provides a world of opportunities. You can work in a variety of industries or in government. You can have titles ranging from financial analyst to compliance analyst, to auditor, controller, or chief financial officer. You can help people or companies create cash flow reports, manage budgets, file taxes, or manage payroll.

There will always be demand for your services, whether you choose to work for somebody or to operate your own accounting firm.

As an accountant, you help your employer or clients understand their finances. But how well do you understand your own? More specifically, do you know what would happen to your household finances if an injury or illness prevents or limits you from working for an extended time period?

If not, you should consider an investment in disability insurance.

If you’re a typical accountant, you:

  • Earn a median salary of about $70,000. The best-paid 25 percent make $92,000 that year, while the lowest-paid 25 percent make $55,000. Typical salaries range from $43,000 to $123,000.
  • Start your career earning about $55,000 a year.
  • Accumulated about $30,000 in student loan debt to earn your bachelor’s degree and more if you attended graduate school.
  • Will be in demand for the next several years, which will help you maximize your income. The Bureau of Labor Statistics projects the field to grow by 10 percent by 2026.

Accountants need disability insurance because:

  • According to the Social Security Administration, about 25 percent of 20-year-olds will become disabled at some point before reaching age 67.
  • A number of accidents and illnesses can prevent you from or limit your ability to work as an accountant.
  • Depending on how much schooling you went through, you may thousands of dollars of student loan debt. This debt will not be forgiven if you can't work due to a disability.
  • Even if you can do other types of work with a disability, the odds are you will earn a fraction of what you make in your current profession.
  • Even if you don’t make a lot of money today, that might change in several years. It’s better to buy disability insurance at a young age.
  • If you’re also a business owner, you may need business overhead insurance to keep your business operating while you recover from a disabling injury or illness.

Accountants can expect to pay the following estimated monthly premium for disability insurance:

  • A 28-year-old male accountant making $50,000 in Milwaukee could get a $1,000 monthly benefit for about $11 a month, a $2,000 monthly benefit for $19, or a $2,890 monthly benefit for $27.
  • A 37-year-old female accountant making $75,000 in Nashville could get a $1,300 monthly benefit for about $31 a month, a $2,600 benefit for $59 a month, or a $3,800 benefit for $84 a month.
  • A 45-year-old male accountant who owns his own firm making $95,000 in San Antonio would pay about $41 a month for a $1,600 monthly benefit, $78 for a $3,200 monthly benefit, and $115 for a $4,800 monthly benefit.
  • A 52-year-old female architect who owns her own firm making $120,000 in San Diego would pay about $109 a month for a $1,900 monthly benefit, $215 for a $3,800 monthly benefit, and $321 for a $5,700 monthly benefit.

These quotes assume a five-year benefit period and a 90-day waiting period.

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Your monthly disability insurance premium will depend on the following factors:

  • Your age and health. The younger and healthier you are, the less you will pay.
  • Your income. Disability insurance is designed to replace a percentage of your income if an injury or illness limits your ability to work as a nurse.
  • Where you live. The states that pay accountants the highest mean salary are District of Columbia ($96,880), New York ($95,430), New Jersey ($91,400), Virginia ($84,740), and California ($83,540).
  • The benefits and features of your disability insurance policy.
  • Your education level, the type of accounting you do, and whether you are a certified public accountant.

Disability insurance companies group jobs into specific occupational classes. These classes take into account the hazards of the job and the difficulty in returning to work following a disability. Another factor is the claim experience associated with certain professions.

Insurance companies generally classify occupations on a scale of 1 to 5 or 6. Typically, the higher the numerical value of the classification the lower the rate available from the insurance company.

CPAs are typically rated in an insurance company’s highest occupation class. Non-CPAs with a four-year accounting degree will generally be rated in the highest or second-highest class, depending on the insurer. Auditors are also rated high, though not as high as CPAs. Bookkeepers and other accountants without degrees generally fall in the middle of insurer’s rating categories. In some cases, higher-earning bookkeepers may be a level above those who earn less.

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