Don't assume that LTD insurance will actually pay your claim if you were to end up needing to make one. They're very good at dragging the process out waiting for your SS disability to be approved and/or just denying your claim. Their process can be very opaque.
In your case, looking at FI in seven years, I'd skip it and focus on saving.
Yup.
And they make us all sign NDAs, so you can't actually look up what the norm is for just how low they tend to settle.
Their usual MO is to deny, drag it out, put you under surveillance, lie, and rack up your legal bill so that you will just give up.
From what I've gathered from people willing to break their NDAs, usually people settle for 30-60 cents on the dollar value of the policy after inflation is factored in.
Meaning, if your policy is $4000/mo and you're 40, then it's dollar value is around 1.2M, but $4000/mo is worth a lot less 25 years from now, so the policy might be valued at somewhere around half of that.
So if you get 30% of ~600K, you could be looking at a settlement of 180K minus legal fees.
Ending up with less than a quarter of what you thought you would get, after a year+ of being put through total hell is not unusual. And they know full well that people tend to be at their emotional lowest during the early days of disability and career loss when they are making these claims, and they capitalize on that.
And that's assuming you have an "own occupation" policy where you are only claiming disability from your own profession. If you have to claim disability from all possible paid work, you will have to be epically FUCKED UP to qualify for a claim.
Also, "own profession" doesn't mean "own job." So if there are jobs you could do under the umbrella of your own occupation, then those can impact eligibility and settlement process.
I very clearly can't do my own job, but there is an argument to be made that I could perform a range of jobs within my profession.
Then there are the consequences if they *do* actually approve you. Remember that surveillance I mentioned? Yeah. They don't just leave you alone and pay you monthly until 65. They monitor you and constantly look for evidence that you should be kicked off the plan. Typically you have to delete all social media, and take other precautions. Also, you often have to be treated by *their* medical team, which creates a whole slew of medical documentation biased to their interpretation of your condition.
Then what happens is they try to offer you a shitty settlement. They don't keep people on the plan until 65, they usually keep them on for a few years, wear them down, build a medical case with their staff in their favour, and then offer a settlement and hope that you don't legally fight it, but if you do, they've already set you up to have a weaker case than you did when you first applied.
For me, the policy was worth it. I barely paid anything for it for a decade, only paid "own occupation" premiums for one year, and I'm a medical professional with an army of doctors behind me, and the best lawyer in the business on my side.
I can't say how it went because of the NDA, but I will say that I think both sides perceived it as a loss, which is about as much of a win as one can hope for in these cases.
I also *thought* I had a realistic expectation, I knew anything over 50% would be a huge win. However, what I wasn't aware of was all of the industry standard conditions applied to the initial amount that would drastically lower what I *thought* I was applying 50% to.
So my percentage expectations were realistic, but my starting number wasn't. With inflation, offsets, etc, the process of getting to a starting number that both sides agree upon before negotiations of percentages, it's crazy how that big number can tumble before the negotiations even begin.
So is the policy worth it? It was for me, and I learned A LOT about myself in the process, but it was a total nightmare and left me with a lot less money than I expected.
Make your decision with eyes open about that. Not based on the numbers you see on paper.
