Author Topic: Disability Insurance?  (Read 1884 times)

Gizsuat2

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Disability Insurance?
« on: March 11, 2016, 10:12:24 PM »
Any recommendations for companyies that provide affordable disability insurance?  I'm talking the long-term, got hit by a drunk driver and need care for the rest of my life variety (God forbid).


bearkat

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Re: Disability Insurance?
« Reply #1 on: March 12, 2016, 08:11:19 AM »
Since you're asking, I'm assuming that you already looked at what your employer provides (if applicable) and what social security provides and found them lacking.

I personally don't have disability insurance beyond my employer, social security, and the state of California. If I did, however I would want my policy to have the following attributes:

 - pay out if I can't return to own pre-disability job and not just can't return to any job (this is "own job" requirement to protect the surgeon who lost fine motor skills but can still be a wal-mart greeter)

 - begin pay out no earlier than 1-year after disability (only insuring against catastrophic case and this is what emergency fund / taxable funds / hardship withdrawals can be used for) as this can really reduce cost of policy

- from a company that's been around for 50-100+ years with good financial backing. A quick google search yields a bunch (MassMutual, LibertyMutual, NorthwesternMutual, etc. etc.)

This link may be helpful in how to think about and evaluate long-term disability insurance policies: https://www.policygenius.com/long-term-disability-insurance/guide?utm_source=blog&utm_medium=post&utm_campaign=how-to-choose-ltd-in-3-mins

Hopefully, other posters have recommendations for specific companies for you.

Gizsuat2

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Re: Disability Insurance?
« Reply #2 on: March 12, 2016, 02:56:20 PM »
Thanks Bearkat.  Self-employed here, so nothing with employer.  Thanks for the decision-making framework!

Jim2001

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Re: Disability Insurance?
« Reply #3 on: March 12, 2016, 04:30:23 PM »
+1 for Bearkat's advice. 

PhysicianOnFIRE

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Re: Disability Insurance?
« Reply #4 on: March 12, 2016, 04:35:43 PM »
Very common for doctors to carry disability until becoming FI.  White Coat Investor has written a series of quality articles on the subject.

http://whitecoatinvestor.com/category/insurance-2/disability-insurance-insurance-2/

Nickels Dimes Quarters

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Re: Disability Insurance?
« Reply #5 on: March 12, 2016, 04:42:25 PM »
I have this through my government employer. Interesting on what's available for you on your own. Let us know what you do.

NDQ

Genevieve

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Re: Disability Insurance?
« Reply #6 on: March 13, 2016, 03:30:15 PM »
Option 1:
Often you can find professional organizations that offer group disability policies for their members. If you're an accountant, for example, I know AICPA has a ridiculously cheap, high-quality disability policy. You'll have to read the fine print -- many of these group policies offer own-occupation coverage for 2-3 years and then stop, which isn't the best as bearkat mentioned.

Option 2:

You can find "no-load" disability insurance providers, which allow you to find insurance policies for a flat fee instead of paying the advisor a variable commission. However, these are hard to find and might not be available in your state. (See: http://www.accuterm.com/no-load.htm) You also have to know what you're doing a bit more as these providers can be a bit more hands off. Insurance policies can be tricky things with lots of little outs for the insurance company, so it's important to do your research if you are doing that.

Option 3:

Otherwise, you can look into a company in your local area and find a broker.

To be honest, if you're feeling ambitious, you can look into all 3 options (group org policies, no/low load policies, broker) and compare. If you do, let us know the results!

How Much

When considering how much coverage you want, the general rule of thumb is at least 60% of income. Companies won't insure beyond about that much because for some, there's little incentive to keep working if you can take care of everything while living on the insurance company!

But since you probably save so much of your income, you might not need as much. Just make sure to have enough % of income that you can live comfortably with medical bills and still save for retirement. Most disability policies end at 65 and expect for Social Security/ Disability to take care of you at that point. So you want enough room in a policy to be able to save to take care of your future self beyond what you think Social Security will provide.

Remember to take into account that you'd be able to qualify for long term disability through Social Security as well. But once again, it's the total disability definition, so it wouldn't cover you if you could do any occupation, even if you are unable do your own.

ETA: Stuff about Social Security.
« Last Edit: March 13, 2016, 03:35:20 PM by Genevieve »

jim555

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Re: Disability Insurance?
« Reply #7 on: March 13, 2016, 03:54:09 PM »
You should get your Social Security statement.  It will tell you how much you would get per month if you become disabled now.