Author Topic: Got quotes for LTD, they're outrageous!  (Read 2951 times)

mousebandit

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Got quotes for LTD, they're outrageous!
« on: November 16, 2017, 07:44:04 PM »
Holy smokes!  I got quotes for Long Term Disability insurance for husband, and they blew my mind.  Like $250/mo!  Has anyone else had to purchase this individually, not through work?  We're your rates this high?  I don't want to spend that kind of money on insurance, but I know LTD is important. 

This quote is from The Standard, in Oregon, who administered the retirement plan at my husbands old employer, so I think they're respectable. 

thingamabobs

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Re: Got quotes for LTD, they're outrageous!
« Reply #1 on: November 16, 2017, 11:22:25 PM »
How much coverage? Elimination period?? % income replacement?

BikeFanatic

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Re: Got quotes for LTD, they're outrageous!
« Reply #2 on: November 17, 2017, 08:49:09 AM »
I was paying 2K a year for STD at work, they did not pay anything towards that premium, but do cover LTD 100 percent. I just dropped coverage this year becuase my job is a desk job now and I do feel I can work through illness and I have a big emergency fund and HELOC that I can tap into.

Gondolin

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Re: Got quotes for LTD, they're outrageous!
« Reply #3 on: November 17, 2017, 10:54:04 AM »
Quote
I don't want to spend that kind of money on insurance, but I know LTD is important

What age and occupation is your husband? What risks are you trying hedge?

mousebandit

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Re: Got quotes for LTD, they're outrageous!
« Reply #4 on: November 17, 2017, 11:03:09 AM »
I will have to open up the quotes again to get exact figures, but I was requesting a standard quote for essential coverage (their basic plan), and he is a civil construction general foreman, earning $110,000-$120,000.  He is 40 years old.

We can cover STD with emergency fund, but need something in place for long term, until we have our stash built up.  I am sahm and we have 4 young children that we homeschool.  My employment skills are pretty outdated, and it's been nearly 20 years since I was in the work force. 

I had expected $50/mo, not over $200!  I suppose it's much higher due to his job classification, as say, compared to an office job.  Sigh.

I will print out the quotes in a bit and examine them more closely.


Dicey

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Re: Got quotes for LTD, they're outrageous!
« Reply #5 on: November 17, 2017, 02:22:24 PM »
Nothing to add, except that I am not a fan. LTD plans cost too much, cover too little and don't last long enough. There's not a LTC plan in existence that covers everything for as long as it's needed. Better to save, plan, invest so you can have the money available when/if needed.

If somebody knows of something that could prove me wrong, I am all ears.

thingamabobs

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Re: Got quotes for LTD, they're outrageous!
« Reply #6 on: November 17, 2017, 05:39:13 PM »
Nothing to add, except that I am not a fan. LTD plans cost too much, cover too little and don't last long enough. There's not a LTC plan in existence that covers everything for as long as it's needed. Better to save, plan, invest so you can have the money available when/if needed.

If somebody knows of something that could prove me wrong, I am all ears.

Are you thinking of long term care plans? I think OP is asking about long term disability insurance which would cover a certain amount of income replacement if her husband becomes disabled. Agree they should be saving and invest, but as she has stated this is to cover expenses in case something happens until they have enough saved.

OP: I'm going to guess it's probably ~70% income replacement and with his age, I'd say that's probably right for the premium. I'd look closely at the definition of disability in the policy.

BikeFanatic

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Re: Got quotes for LTD, they're outrageous!
« Reply #7 on: November 17, 2017, 06:13:22 PM »
My plan covers 50% of my salary, and that payout is non taxable. I took STD when I hurt my neck and I was surprised that I did not have to pay taxes. That brings up the value to about 75% of salary. Probably worth it for contruction. I was a Nurse when I had the short adnlong term disabilty and nurses get hurt so it is a good bet. In Constuction therer may be no "light duty". WHere I worked you had to be physically fit or could not work at all.

rubybeth

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Re: Got quotes for LTD, they're outrageous!
« Reply #8 on: November 17, 2017, 06:23:53 PM »
I'd look for other quotes. Weird that he's in construction and isn't offered this at work (unless it's his company?). Disability risk is high with jobs "in the field," and far too few people carry enough short-term and long-term disability. Please do not bank on Social Security Disability Income--it can be very difficult to get. Even $250/mo might be worth it ($3k per year) if you can't easily cover the loss of his income for a long term injury or illness.

startingsmall

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Re: Got quotes for LTD, they're outrageous!
« Reply #9 on: November 17, 2017, 07:31:58 PM »
I will have to open up the quotes again to get exact figures, but I was requesting a standard quote for essential coverage (their basic plan), and he is a civil construction general foreman, earning $110,000-$120,000.  He is 40 years old.

We can cover STD with emergency fund, but need something in place for long term, until we have our stash built up.  I am sahm and we have 4 young children that we homeschool.  My employment skills are pretty outdated, and it's been nearly 20 years since I was in the work force. 

I had expected $50/mo, not over $200!  I suppose it's much higher due to his job classification, as say, compared to an office job.  Sigh.

I will print out the quotes in a bit and examine them more closely.

I pay $110/month, but my job is probably slightly lower risk (veterinarian) and my income is only about $90k. So $250/month doesn't sound completely unreasonable to me. Mine is through a professional organization... not sure if there's anything like that for your husband?

Dicey

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Re: Got quotes for LTD, they're outrageous!
« Reply #10 on: November 17, 2017, 07:49:56 PM »
Nothing to add, except that I am not a fan. LTD plans cost too much, cover too little and don't last long enough. There's not a LTC plan in existence that covers everything for as long as it's needed. Better to save, plan, invest so you can have the money available when/if needed.

If somebody knows of something that could prove me wrong, I am all ears.

Are you thinking of long term care plans? I think OP is asking about long term disability insurance which would cover a certain amount of income replacement if her husband becomes disabled. Agree they should be saving and invest, but as she has stated this is to cover expenses in case something happens until they have enough saved.

OP: I'm going to guess it's probably ~70% income replacement and with his age, I'd say that's probably right for the premium. I'd look closely at the definition of disability in the policy.
Yup, my mistake. Oops. I could pull my post, but the quote will still be there, so I'll let my stupid stand.

In my single, pre-FIRE days, before my 'stache was very big, I did LTD when it was cheap. When I switched employers and it got spendier, I consulted my CPA, who advised against it. Same idea: too many loopholes, too little benefit for the cost.

As to LTC, nope.

Sorry for the alphabet soup mix-up.

Paul der Krake

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Re: Got quotes for LTD, they're outrageous!
« Reply #11 on: November 17, 2017, 08:18:13 PM »
It's not surprising at all that the individual market would be more expensive than group coverage through work. Textbook example of adverse selection.

brooklynmoney

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Re: Got quotes for LTD, they're outrageous!
« Reply #12 on: November 17, 2017, 08:25:04 PM »
I pay $750 a year about for LTD. Iím a 44 year old female office worker. But my payout is limited to 5 years if I ever make a claim because of a stupid genetic defect. Iíve had the policy for about 6 years or so. Back then I wasnít making much more than your husband. Itís from Northeetern Mutual. I plan to keep it until I retire hopefully in 6 years.

Goldielocks

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Re: Got quotes for LTD, they're outrageous!
« Reply #13 on: November 18, 2017, 09:37:37 PM »
To get lower rates, try increasing your qualifying period to  6 months or more.  The standard is 3 months, and the average disability is only 1-2 years, so expanding to 6 months before receiving a payout could help you, and cover the real needs, which is the risk of many years of no work, not 6 months of no work...

Next, see if the plan is one that is a second payer, so any worker compensation for injuries reduces the amount the insurance pays out.  The quality plans don't reduce coverage but cost more.

Third, what do you need as a "disability"?  the ability to work the same job or similar pay, or the ability to work ANY job?

Also, for CDN's, your CPP will offer some disability insurance... e.g., if you have paid in for a long time, you could get $750 or even $1200 per month from CPP.

RidetheRain

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Re: Got quotes for LTD, they're outrageous!
« Reply #14 on: November 21, 2017, 11:33:10 AM »
LTD is kind of ridiculous generally. In your place, I would nix the plan and save the $3000/yr. Instead (and I dread saying this to a mother of four) maybe you should look into a home side hustle? Nothing big since you already have more than a full-time job at home, but ideas for things that would make it easier to get back into the workforce if necessary. A small money-making hobby that can be turned into something bigger if you ever want to would be a great backup plan.

SimpleCycle

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Re: Got quotes for LTD, they're outrageous!
« Reply #15 on: November 21, 2017, 01:13:21 PM »
According to the Social Security Administration, you have a 1 in 4 chance of becoming disabled for 3 months or more during your working-age years.  Insurance for something that is more likely to happen (disability) is going to be much more than insurance for an unlikely scenario (life insurance).  However, if the loss of your husband's income would be devastating, you should have LTD until your stache is large enough to self-insure.  I agree that changing the waiting period might help quite a bit with premiums.

mousebandit

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Re: Got quotes for LTD, they're outrageous!
« Reply #16 on: November 27, 2017, 04:58:25 PM »
I finally got the quotes printed out and sat and read them closely.  The payout would be about 50% of his current take home pay, which is good.  If I up the elimination period to 6-months,  it's not as bad.  I will talk to husband some tonight about whether we think 5-yr or 10-yr term is needed.  The first two years, disability means cannot work his own (regular) job.  After that, it's any gainful employment, but there are also benefits for voc rehab and even modification of the home to suit the disability. 

With 4 little ones, homeschooling, and me having very little in current marketable skills, it would absolutely be devastating if he lost his income for more than 6-months or so.  We are still in debt paydown mode, although the house is paid off, and it will be a couple of years before we could navigate more than that long of no income. 

I think we will end up at about $180-$200/mo premium.  Unfortunately, this is a new employer, small, and they offer zilch for benefits.  They don't even do direct deposit of the paycheck, lol! 

Thank you for the reassurances and points to check!  I actually feel pretty good about this now.