Author Topic: Long Term Disability Insurance  (Read 3123 times)

Xlar

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Long Term Disability Insurance
« on: March 25, 2015, 07:44:01 PM »
So I am trying to decide if I should get some long term disability insurance. I am 24, just graduated from college with my Masters degree, recently married, and am just starting my journey towards FIRE. My wife is still in school and I work full time. I have been told that Long Term Disability Insurance is a good thing to have since I'm so young.

It's not offered through my work and from looking around on the web the only place that I can find to buy it from is Zander Insurance Group. It looks like it'll only cost me ~$130 per year for $2k a month benefit with a 5 year benefit period and a 6 month elimination period. This doesn't seem too expensive and $2k a month would cover all of my expenses. Is this a good idea? I could get a benefit period that lasts until age 65 for ~$170 a year. Of course, I have no idea how accurate their quotes are.

I appreciate any input! :)

Retired To Win

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Re: Long Term Disability Insurance
« Reply #1 on: March 25, 2015, 08:34:47 PM »
Check carefully how they define disabled.  And the specifics on that 6-month elimination period.

And, of course, make sure you set up and maintain a minimum 6-month Emergency Reserve to cover your expenses in case your income gets interrupted for ANY reason.  ;)

seattlecyclone

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Re: Long Term Disability Insurance
« Reply #2 on: March 25, 2015, 11:07:27 PM »
I'd think twice before buying five-year disability insurance. Odds are you won't simply "get better" after five years of being disabled. If the benefit is close to what you already spend, you should look into getting a policy that provides that benefit indefinitely, or at least long enough for your current stash to grow to the point where you would be FI.

HazelStone

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Re: Long Term Disability Insurance
« Reply #3 on: March 26, 2015, 07:04:01 AM »

It's not offered through my work and from looking around on the web the only place that I can find to buy it from is Zander Insurance Group. It looks like it'll only cost me ~$130 per year for $2k a month benefit with a 5 year benefit period and a 6 month elimination period. This doesn't seem too expensive and $2k a month would cover all of my expenses. Is this a good idea? I could get a benefit period that lasts until age 65 for ~$170 a year. Of course, I have no idea how accurate their quotes are.

I appreciate any input! :)

Why do you think the only place you can buy it is Zander Insurance Group? Many companies offer long term disability coverage. Contact the companies directly or contact an independent agent.  Zander, as I recall, is what is "endorsed" by Dave Ramsey. They aren't the only people out there.

Medical history will figure into the final quote. If you are reasonably healthy, you shouldn't see much, if any deviation from the quotes.

But definitely get a benefit period lasting to 65 or 67. Insurance is meant to cover the huge things that come up that are beyond your resources to deal with. Also, read up on what the terms of coverage mean (own occupation/any occupation being a big one, whether they adiust your benefit if you're eligible for Social Security disability)... and as you look at monthly benefit amounts, consider that a serious disability may involve higher medical bills on a regular basis.

*I worked in the insurance industry for a few years. Mercifully, I escaped. It gets really, really depressing seeing people trying to find "coverage" after the fact... or responsible people who got ill and their employer cuts them loose... and a friend from high school ended up severely disabled.


Bstarr

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Re: Long Term Disability Insurance
« Reply #4 on: March 26, 2015, 01:45:22 PM »
Check Northwestern.
And depending on your field it may make sense to buy job specific. Like if I can't do my job, I can still be a professor in my field, work in a clinic, or whatever, I just can't practice.
And depending on your finances, 6 months might be a long time to wait for a check. 
But the premium is certainly awesome. I pay more than that a month!

seattlecyclone

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Re: Long Term Disability Insurance
« Reply #5 on: March 26, 2015, 02:35:46 PM »
Check Northwestern.
And depending on your field it may make sense to buy job specific. Like if I can't do my job, I can still be a professor in my field, work in a clinic, or whatever, I just can't practice.

Yes, this is also important to consider. I'm a software engineer. Very few physical disabilities would significantly impair my ability to do my job in the long term. I could program just fine if my legs stopped working. Deafness would be an adjustment, but likely moreso in the rest of my life than in my job. As long as I had at least one working eye and one working hand I could probably get the job done just fine. On the other hand, if I had a brain injury that caused long-term mental impairment...game over.

The problem with that, however, is that many disability insurance policies (and social security disability) won't pay you unless you're unfit to do any job. So if I did have mental impairment but I was still able to work as a janitor or something, the disability policy I bought might turn out to be worthless.

Acg

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Re: Long Term Disability Insurance
« Reply #6 on: March 26, 2015, 04:01:20 PM »
I don't know why I did it but I chose to pay for long term disability at my first job out of undergrad.  I was diagnosed with brain cancer about a year ago and that policy provides me with so much peace of mind.  I don't mean to make this a sob story but you really never know what's going to happen.  And it so cheap when you're younger...

caliq

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Re: Long Term Disability Insurance
« Reply #7 on: March 26, 2015, 08:33:31 PM »
I don't know why I did it but I chose to pay for long term disability at my first job out of undergrad.  I was diagnosed with brain cancer about a year ago and that policy provides me with so much peace of mind.  I don't mean to make this a sob story but you really never know what's going to happen.  And it so cheap when you're younger...

+1

My husband developed a neurological condition in his early 20's that progressively worsened; last summer, at 28, he was told by doctors that he could no longer drive.  He's considered 100% disabled by the VA.  He was a Marine, and served his full five years -- not an unhealthy or sickly person by any means, except for this one debilitating condition that popped up out of nowhere. 

It breaks my heart when I see young people on here looking for ways to cut back, and claiming, with all the confidence in the world, that they're young and healthy and therefore have no need to worry about disability or life insurance.  You never know what's going to happen :/

Xlar

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Re: Long Term Disability Insurance
« Reply #8 on: March 27, 2015, 08:45:03 AM »
Thank you all for the responses.

I currently have a 3 month emergency fund set up and am slowly working that up to 6 months. I am focusing on paying off my wife's student loans so all of our spare income (around 50-60%) is going there. After that is paid off then that portion of our income will go towards our 'stash.

I appreciate the comments about checking what qualifies as disabled, I'll have to get the exact policy documents and take a read through them. From the research that I've done so far I couldn't find anywhere that offers job specific disability any more. From the articles that I've read it seems that most companies policies have changed. I have read a lot of articles supporting getting disability insurance, especially when your young. It's definitely a situation where the insurance covers the events that are too big for me to cover by myself, the chances of getting some kind of disability are surprisingly high! Once I reach or am close to FIRE obviously I would be self insured as I would be relying on my 'stash if something happened.

I'll definitely do some more shopping around, thank you for the suggestion of looking into Northwestern. From looking on Zander's website (it's easy to get an informal quote) it's only $30 extra per year to get coverage until age 65 instead of just 5 years. Now I have no idea how accurate their quote will be. When I applied for life insurance I got a quote and medical exam done by two different companies. The medical exam was done at the same time for both companies by the same 3rd party company. I'm very healthy and one of the companies (MetLife) came back with a final price less than their initial quote. On the other hand the other company (Banner Life) came back with a final price over twice their initial quote! So I'm not holding my breath as to the reliability of the quote from Zander.

I'll do some more work on finding some other companies that will provide long term disability insurance to an individual and report back my findings. If anyone has long term disability as an individual (not through work) and would be willing to report back who they go it through and what their experience has been like I'd appreciate it! [:)]

Acg and caliq, thank you for sharing your stories. It has definitely reinforced the importance of getting long term disability insurance for myself until I'm FIRE.