Disability Insurance - any thoughts/recommendation?

[wilkens21]

Been reading Insurance for Dummies and they said that the one insurance that no one ever really goes for is this one. They said there is about a 33% chance you will be disabled from working for some reason or other (possibly long-term), so this got me thinking a lot about my assets, etc...

I'm not yet 40, but in terms of what I do for a living, I am at risk for this.

Do folks have good experiences with purchasing this kind of insurance? I'm still learning...

Thanks!

[73ss454]

I had 2 policies in place since 1982. This year I let them lapse do to ER last year.
I did have the best experience with my policies, I never had to use them.

One thing I remember is that they paid out till the age of 65. But one problem in the policy was that after 2 years if you were able to perform any type of work you had to go back, even if it wasn't in your normal line of work.

[Meadbh]

I have disability insurance that would replace most of my income, tax free, with a 180 day waiting period. If I were disabled but able to work at something less financially lucrative, it would still kick in. When I am within 180 days of retiring, I will cancel it.

Life insurance, on the other hand, I don't have, except for the minimum package that comes as a benefit. I don't have any dependents, and after I'm dead, I don't care!

[FIREdreamer]

My wife (the main bread winner in our little family) has both a short term and a long term disability policy. The short term policy would replace 100% of her income for 180 days. After that the long term policy would kick in. It would provide just enough tax free COLA'd income to maintain our current lifestyle until age 65. My wife also has short term and long term disability policies through her work, but by themselves they would be grossly insufficient in case she'd ever become disabled. Disability insurance can be costly so in our case we had to balance the need to cover as much of our income as possible without paying too high a premium.

[slazenger]

It's a good thing to have. I have a policy provided by my employer. But if i didn't, I'd buy a separate policy.

[Htown Harry]

I've had LTD for about 20 years, since my first DD was born when I was in my 20's. My employer at the time offered a so-so policy at a single premium for all employees. Being young and healthy, I found that I was eligible for a much lower, age-based rate through a professional society's group plan.

I later had a high-end STD / LTD policy fully paid by employer #2 - 100% of salary for 90 days, then 60% until age 65. Disability was defined as unable to do the job I had at the company, not "any" job.

Last year I went to employer #3, who provides at no cost an LTD policy with 50% salary coverage from months 6-24. (I guess with that span of coverage there's a lousy assumption that those eligible to make a claim on the employer's plan will qualify for Social Security disability before their LTD benefits run out...)

For an out-of-pocket payroll deduction, they also offer a flat-rate supplemental policy that raises the coverage to a more traditional 60% of salary from 3 months through age 65.

The math in comparing the company supplemental policy's premium to a policy I could get on my own worked the other way for me this time around, at age 47. I compared the professional society's age-based premiums to the flat rate for the supplemental policy at the job. This time, the premiums were about even for the next couple of years. After that, however, the age-rated premiums started jumping up significantly.

I went with the employer's supplemental policy. Right now, I plan to keep it in force until I ER or DD#2 graduates from college, whichever comes first.

No claims stories to share, knock on wood.

[brewer12345]

DI is a must. If you can't get a policy through an employer, go shopping for an individual policy. I would shop Northwestern Mutual, New York Life, Guardian, and MassMutual.

[jdmorton]

...if you are still w*rking. I opted for 100% salary replacement for my short-term DI when MegaCorp started offering it about 5 years ago. I do pay extra for that - MegaCorp provides 70% salary replacement for short term DI at no extra charge. Had my hip repaced last Falll and was off w*rk for 3 months at full salary. The extra I paid for the 100% salary replacement since I started paying was recouped, and I will still be ahead of the game for another 1.5 years or so (the difference between being payed for the 100% coverage verses the "free" 70% coverage for those 3 months at my salary - if that is making any sense ).

Interestingly, when I went back to w*rk - boo!! - I found out a lot of people were assuming that the 70% salary replacement would be good enough. For some, I imagine it would be. For others, I think taking a 30% pay cut for 3 months would be quite a shock.