LTD (Long Term Disability)

[Webzter]

All you chain-sawers, are you in tornado territory?

HOPE NOT!

Not here! Dead ash trees from the weevil and a mulberry with a nasty split.... and a neighbor that just had to have a walnut next to the house taken down (I think he thought it was an ash). I'm under strict orders from my woodworking relatives that I'm to save the walnut until they've had a chance to pick out some pieces. (which will translate to some awesome gifts coming back)

 

[SteveL]

LTD is most often sold as a benefit in group insurance plans. It is also available on an individual basis. One can achieve significant savings in the purchase by extending the waiting period.
The longer you wait before beginning payments, the lower the cost. Don't forget, that most policies coordinate with SS disability payments which can begin after six months.
Another key fact to determine is the "definition of disability" in the policy. Usually, for the first 2 years or so the definition says something about the inability to perform your customary occupation. Some policies change after five years into the "inability to perform any occupation". A little thought can help you understand the complications that this could produce.

When I worked, we had a disability group plan that provided cover after 90 days of disability. The company had a generous sick leave policy and one could accumulate this over the years. They would only pay for a portion of these days upon retirement, but we knew that we could make it to the onset of the LTD cover.
I understand that some companies offer a Short TD cover that begins after 2 week and can carry you to a 90 time.
Occupation make a lot of difference. Prior to carpel tunnel, office workers paid the least, and those in construction often couldn't buy it. I'm out of touch with current underwriting, but most companies that write disability on an individual basis often lose money, especially when the economy is bad.

 

[chinaco]

Well it's the horror stories online that scare me. If I am going to spend 5% of my income as protection, the last thing I want to deal with when I am disabled is a megacorp insurance company that is doing anything it possibly can to not pay benefits. ...

IMO - I would stick with highly rated companies that have a solid reputation.

Here are two things you should do (as part of your research):

• Make sure you understand the details of the contact (and qualifications for LTD) before you buy. Do not rely (solely) on what the insurance agent tells you!
• Check state insurance commissioners web sites for complaints against the company.

This is not foolproof.... but doing your homework may help you to avoid certain problems (products and/or companies).

 

[Purron]

All you chain-sawers, are you in tornado territory?

HOPE NOT!

Also not in tornado territory. Here in Virginia, we had unusually heavy snows the last couple of winters. Many trees, particularly cedars, went down and many others were weakened and fell later.

My heart goes out to all those suffering from the horrible weather.

 

[Ally]

We have it through our workplaces.

 

[ronocnikral]

after 9 months of trying to conceive (where's the smiley with the grin ear to ear?), we finally got it all figured out. so...i'm getting serious about all this LTD "stuff."

my employer covers me up to 40%. and i can purchase an additional 20% from my employer for less than $30/month. the bad thing, if i leave, poof, nothing. so i did some research and came across guardian, who is reported to have the "best" policy. i'm getting quotes together, but i hear it is expensive. the upside is it is "own occupation." of course, i don't know if it is worth the extra money...if I am unable to sit in front of a computer all day, i'm not sure what other job is out there i would be able to do...

interesting thing i learned: private DI will only insure up to the same max as your company will?

 

[dgoldenz]

There is a huge difference between group LTD and a good individual LTD policy. Guardian is the gold standard of LTD policies on the individual market. LTD is NOT like life insurance - with life insurance, you are either dead or not dead and a claim is paid if you die. With LTD, the definition of disability is the most critical part of the policy and you get what you pay for. A cheap LTD policy is cheap because it will have the least claims. As an example, a Guardian policy will pay if you cannot work in your own occupation up to age 65 or 67 (assuming you choose that benefit period), while a group LTD policy may only have a two-year own occupation clause and then say if you can work in any job, you will not be paid.

Let's say you are a surgeon with a $20k per month benefit and you develop Parkinson's disease and can no longer perform surgery. Under an own-occupation policy with a specialty definition, the surgeon would be paid the benefit as long as they are disabled even if they can go teach at medical school or work behind the scenes in the hospital. Under a group policy, they would probably be restricted to two years of benefits and then the inferior definition of disability would stop paying benefits at that point.

There are a lot more differences, but I don't want to write a novel here. A good LTD policy will cost 2-4% of income for a "to age 65" benefit period depending on what riders are included.

 

[ronocnikral]

my point is, as an engineer who sits (and stands) at a desk all day on a computer, i am having a hard thinking of a job i could do if i wasn't able to do my engineering job. i understand the surgeon scenario.

and if that is off the table, what other benefits does guardian's primo plan bring that a typical group policy wouldn't?

 

[ronocnikral]

got my quote back. not as bad as i thought. $900 until age 67 w/ 3% cola and just about all the riders.

thinking about using guardian for life insurance as well...

 

[escape_nyc]

Is there a limited benefit period (2 years, 5 years, etc.)?

 

[ronocnikral]

that's for an elimination period of 360 days. you can chose as early as 30 days.

 

[52andout]

DH had a sit at the desk, stand and some walking job when he fell on the ice and had a back injury resulting in three surgeries with a bout of cancer in the middle. He could not tolerate sitting or standing for long times and management gets testy about people lying in the aisles. He missed over 9 months from work, then went back to work for a few more years, missed almost a year, then went back for two years and took early retirement. His short term disability was 100% for six months then 70% (we had bought into the upgrade)- but luckily he never got to the point of applying for social security disability as he worked very hard to rehabilitate.

We had it through his megacorp so the cost was minimal. Since I was also working we were able to keep our retirement savings and able to put the kids through college even with his medical problems. Not having to worry about being short on money was a huge help and I think really contributed to him being able to concentrate on getting better. Instead of being overwhelmed and uncertain we felt very lucky that we could afford to live our life and get great medical care as we were able to continue with first rate medical insurance.

I hope it doesn't come to that for any of you but it certainly was worth every penny to us.

 

[dgoldenz]

got my quote back. not as bad as i thought. $900 until age 67 w/ 3% cola and just about all the riders.

thinking about using guardian for life insurance as well...

That seems really low to insure your full salary. The riders alone would usually be $900+ per year. Are you sure that's not $900 per quarter or something? A 360-day EP is very long....if you make $100k, think about a 360-day EP as a ~$50k deductible

 

[ronocnikral]

clarification...it's for 30% of my salary. my company already provides 40%, and this is additional coverage. guardian even goes as far to get in touch with my employer to verify my current coverage.

with STD coverage (28 weeks) and over a year of expenses saved...a year seems about correct. what's the point of an emergency fund if you won't use it while you can't work?

 

[dgoldenz]

That sounds about right then depending on your salary. 28 weeks is a pretty long STD policy, most are 13 weeks.

 

[ronocnikral]

14 weeks full pay, 14 weeks half pay for STD.

 

[REWahoo]

14 weeks full pay, 14 weeks half pay for STD.

Just curious - do you get more or less time if the disease wasn't sexually transmitted?

 

[ronocnikral]

Just curious - do you get more or less time if the disease wasn't sexually transmitted?

most definitely less.

 

[ronocnikral]

questions about guardian life insurance:

-each sales person I talk to tries to steer me away from guardian...why is that? I assume guardian's commission is less than others. guardian is definitely more expensive, less than TIAA-Cref though...

-a sales person told me going with a mutual company only makes sense if you want to convert to some kind of "permanent" insurance. it seems to me, 30 year term or permanent, the company still needs to be there to pay a benefit (hopefully it doesn't come to that). can someone help me make sense of this?

any help is appreciated...

 

[dgoldenz]

questions about guardian life insurance:

-each sales person I talk to tries to steer me away from guardian...why is that? I assume guardian's commission is less than others. guardian is definitely more expensive, less than TIAA-Cref though...

-a sales person told me going with a mutual company only makes sense if you want to convert to some kind of "permanent" insurance. it seems to me, 30 year term or permanent, the company still needs to be there to pay a benefit (hopefully it doesn't come to that). can someone help me make sense of this?

any help is appreciated...

Each person you talk to probably isn't licensed with Guardian. They are a good company, though their rates can be higher than other companies. If you are shopping on price, Guardian usually won't be at the top of the list. If you are shopping on financial ratings and the ability to convert to whole life with a mutual company (whether you plan to or not, never know what can happen to you), they are a good choice. I'd suggest including the conversion extension rider if you go with Guardian, otherwise your conversion period is only 5 years.

 

[ronocnikral]

thanks...just couldn't figure out while everyone is steering me away from them (for LI)...