Skip Life Insurance Disability Waiver?

[James]

I'm setting up a new life insurance policy.  The rate will be locked for 20 years, $750,000 for me and $250,000 for my wife. (I'm the only one bringing income at this point)  Rate is $56 without waiver and $66 with waver for myself, and $25.50 without waiver and $29 with for my wife.


I assume the disability waiver is simply not worth the $13 per month or $3,120 cost over 20 years.  I'm healthy and taking care of myself, so disability should be less likely in me than the average population.


Thoughts?

[gooki]

What's out disability from a car crash?

[Another Reader]

This is like taking the credit card insurance that will make your payments if you become disabled.   In the unlikely event I was disabled, I would pay the life insurance premiums out of savings or whatever income I got from disability insurance.

[TLV]

This is like taking the credit card insurance that will make your payments if you become disabled.   In the unlikely event I was disabled, I would pay the life insurance premiums out of savings or whatever income I got from disability insurance.

Let me get this straight - we're not talking about disability insurance, where they'll pay you large amounts of money if you're disabled, but just a waiver of premium in the event you get disabled?

So they want $56/mo. to cover you for $750,000 if you die, and $10/mo. to cover you for $56/mo for the remainder of the term (or does it cover for the rest of your life if you're disabled?) - $13440 tops if you get disabled the day after it goes into effect. That comes out to more than 10x as much per dollar of coverage, and gets worse as time goes on.

+1 to Another Reader's suggestion of separate disability insurance, instead of a disability waiver on the life insurance. It may or may not be more expensive (mine through work costs about $25/mo. for 60% salary), but you'll get a heck of a lot more out of it than $56/mo. if you do need it.

[James]

This is like taking the credit card insurance that will make your payments if you become disabled.   In the unlikely event I was disabled, I would pay the life insurance premiums out of savings or whatever income I got from disability insurance.

Let me get this straight - we're not talking about disability insurance, where they'll pay you large amounts of money if you're disabled, but just a waiver of premium in the event you get disabled?

So they want $56/mo. to cover you for $750,000 if you die, and $10/mo. to cover you for $56/mo for the remainder of the term (or does it cover for the rest of your life if you're disabled?) - $13440 tops if you get disabled the day after it goes into effect. That comes out to more than 10x as much per dollar of coverage, and gets worse as time goes on.

+1 to Another Reader's suggestion of separate disability insurance, instead of a disability waiver on the life insurance. It may or may not be more expensive (mine through work costs about $25/mo. for 60% salary), but you'll get a heck of a lot more out of it than $56/mo. if you do need it.

Bingo, $13440 was the number I was missing.  I was trying to think of the actual value of that extra coverage and that is the obvious answer, can't believe I didn't realize it.  It didn't seem right and my gut was to skip it, but I wasn't absolutely sure and I wasn't sure how to compare the value of the coverage to anything else.

I was turned down for separate disability insurance 9 years ago, which is probably a good thing because it was going to cost a fortune...  That is back when I also started my whole life insurance which has been a huge waste.  I have disability through work, and with my new mustachian living it would be sufficient along with my other savings.

Thanks much for the clarity, greatly appreciate it.