Author Topic: Disability and Life Insurance  (Read 1688 times)

Insanity

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Disability and Life Insurance
« on: March 25, 2014, 10:13:15 AM »
Alright, so I need some advice. 

If the only way one can get life or disability insurance is through a group plan by working for another company is that something which should stop one from going out on their own?

I am in a position right now, were I have potentially two contracts for my own company.  The management of the contracts over the short term is not a problem.  The problem is that if I do this, I will need to walk away from a potential FTE contract to hire position (which will supposedly happen in anywhere from 2-4 months -- though it has been about 2-3 months longer than expected already). 

From a salary/health care perspective, I can afford this and I'll probably go on my own now.

The question becomes, I'll lose out on any possibility of disability and life insurance.  I have a chronic illness which will pretty much guarantee I can't get any of those.  The rate for the two contract is such that I can work roughly 200 hours less over the course of the year in order to maintain the same effective salary as what I would be making as an employee (assuming the discussed salary for conversion remained the same).

Note: the salary differential takes into account business side taxes, full medical coverage, HSA contributions, solo 401K contribution, business side taxes/medicare/fica, but not business expenses.

So the question is: how much is life and disability insurance worth?  From a financial perspective, my wife would have enough support from both sets of parents (mine and hers) to deal with the hardships financially if we don't have it.

Note 2:  As of right now, the disability and life insurance that I have the contract agency for the contract tot hire position is negligible. So effectively this becomes a "do I wait and hold out solely for the life and disability or do I say fuck it and go for it on my own".

Make sense?

mxt0133

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Re: Disability and Life Insurance
« Reply #1 on: March 25, 2014, 10:44:19 AM »
Regarding life insurance I got a individual term life insurance when we had kids just to address the situation you are currently in, I did not want it tied to my employer.  I would recommend getting a policy that would cover your family until the kids are done with high school or college.

I really haven't researched disability, I guess I should start now, also consider that there is SS dependent benefit and disability which should factor in how much your policies need to pay out.


lackofstache

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Re: Disability and Life Insurance
« Reply #2 on: March 25, 2014, 11:03:10 AM »
Is there any way you can keep the policies you have currently when you leave? Most insurers give employees that option when leaving the group plan.

If you can do that, you may be able to increase the death benefit if you convert to a Universal or Whole Life policy. If you can't or wouldn't want to, I'd say earn and save as much as you can for that wife of yours.

My wife has a small Whole life plan we got before we knew what we were doing and before she got cancer. We're locked in to a fairly expensive, small death benefit policy, but we have something, which is better than what we can get now. I'd try to keep whatever you can in place until you don't need it.

seattlecyclone

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Re: Disability and Life Insurance
« Reply #3 on: March 25, 2014, 02:35:25 PM »
So the question is: how much is life and disability insurance worth?  From a financial perspective, my wife would have enough support from both sets of parents (mine and hers) to deal with the hardships financially if we don't have it.

I think you may have just answered your own question. The cardinal rule of buying insurance is to self-insure whenever you can reasonably afford to do so. If your loved ones wouldn't experience significant financial hardship if you died without life insurance, why buy it?

Disability insurance is a bit tougher to estimate because you need to consider the cost of your own living expenses for a lifetime of being unable to work. These expenses may be higher than now if you need to pay for things like a wheelchair, other assistive devices, additional medical care, or other items related to your disability. Do take a moment to look up what your social security disability payment would be. You may find that it would cover most or all of the cost of a frugal lifestyle, and your existing savings may be enough to make up any difference.