Disability/Umbrella policies

[Scout]

Several of you responded on one of my earlier posts about the importance of disability insurance and umbrella policies...(see advice from physicians). Do you guys have recommendations regarding the best companies to go with? I have looked into disability insurance heavily, but can't decide if it's worth since we have two good incomes...of course there is the possibility of a car accident etc.

 

[lets-retire]

This is just my opinion. I would say have a disability policy the only covers slightly more than your income needed for expenses. If I remember you original post correctly, you said you were putting away about $200k per year. I would think that insuring all of this portion of your income would be a bit excessive. I was in a job that required me to be in good physical shape and have the doctor's note to prove it. So even a minor injury could have put me out for a very long time. My wife on the other hand could work as long as her brain and hands were working alright. So even when she had a large tumor removed from her frontal lobe, she was only out for a couple months. If you or your wife could either change fields if you're not able to handle the rigors of the ER after an injury, I'm not intimately familiar with the different paths available to you, but maybe move to a less rigorous area, like family practice. You'd be able to lower the amount of disability insurance even more to say enough to cover a years worth of expenses with the spending of you savings.

As far as a good company my wife had a company supplied Unum policy. We had a guy assisting us, who we found out was fired during DW disability. It made sense, because we started with a man and finsihed with a woman. He caused many delays in her receiving her pay. It was sorted out when we started to make a coupled phone calls, but they were very easy to work with.

 

[brewer12345]

Scout, I personally regard DI as a must. By far, your largest asset right now is your earning power, which is easily worth millions of dollars for each of you. Once you are FI, it is another matter, but untol then you run the risk of having this huge asset sudenly disappear, and there is no way to diversify it.

Not all DI companies are created equal, and there have been a lot of instances of companies stiffing policyholders. I do not wish to name names, but do a search and you will see at least one major DI company in class action and regulatory settlements with big dollars involved. So this is a product it pays to be very picky about who you buy it from. The only companies I would be eager to buy an individual DI policy from are (in no particular order): Northwestern Mutual, MassMutual, and Guardian. They may charge more for their policies, but this is an area you do NOT want to skimp in.

An umbrella would also be wise, since your mere profession puts dollar signs in would-be plaintiff's eyes. Umbrella policies are relatively cheap (hundreds a year for multi-million dollar policies). You needn't be that picky about who you get one from, although it is usually whoever writes your auto policy.

 

[azanon]

You already have my opinion on the disability in your case. I only believe in buying insurance out of need, and not logic alone. My assumption, then, is no one needs the income from two doctors.

I would get an umbrella policy covering your gross income and a bit more; or just update it every so often as your gross worth increases. I dont personally have one yet, and maybe that isnt wise (my gross worth is just shy of 400K), but i do intend to get one eventually.

With respect to umbrella, I believe one's lifestyle has a lot to do with the importance of it. For instance, if you throw a lot of parties at your house, umbrella might be more important. If you work with people in any profession and you represent yourself (instead of, like, in my case where I'm the government, not me) then umbrella is more important. We're no doubt a sue happy country, but obviously, some people are going to be more prone to a lawsuit than others given one's lifestyle. On the whole, my lifestyle should lend itself to low risk for lawsuits. I dont think brewer, for instance, can sue me because i get under his skin daily.

 

[maddythebeagle]

Interesting discussion Brewer...I wouldnt have even considered these policies...

 

[brewer12345]

Interesting discussion Brewer...I wouldnt have even considered these policies...

A lot of employers provide or make DI available to their employees. Since that is generally a cheap source of DI that requires no underwriting, etc., it can be a good way to go. But for a DR, Lawyer, etc., I think a gold-plated policy from a top shelf insurer would be a prudent choice.

As far as umbrella goes, if you drive a car or own a home, you should have a $1MM umbrella minimum.

 

[FinanceDude]

Scout, I personally regard DI as a must. By far, your largest asset right now is your earning power, which is easily worth millions of dollars for each of you. Once you are FI, it is another matter, but untol then you run the risk of having this huge asset sudenly disappear, and there is no way to diversify it.

Not all DI companies are created equal, and there have been a lot of instances of companies stiffing policyholders. I do not wish to name names, but do a search and you will see at least one major DI company in class action and regulatory settlements with big dollars involved. So this is a product it pays to be very picky about who you buy it from. The only companies I would be eager to buy an individual DI policy from are (in no particular order): Northwestern Mutual, MassMutual, and Guardian. They may charge more for their policies, but this is an area you do NOT want to skimp in.

An umbrella would also be wise, since your mere profession puts dollar signs in would-be plaintiff's eyes. Umbrella policies are relatively cheap (hundreds a year for multi-million dollar policies). You needn't be that picky about who you get one from, although it is usually whoever writes your auto policy.

Agree with those choices.............those companies have large policy reserves and high ratings from AM Best and Weiss............bottom line, they are not cheap, and are a little nitpicky on certain occupations, but they WILL PAY...........

State Farm, American Family, Sentry Insurance, etc............pretty much everybody offers umbrellas. I think everyone that drives and/or owns a home needs one. Usually the first $1m is the most expensive, then it's 50% less for the 2nd million of coverage, etc.

Here's a scenario that actually happened to a client of mine. Some middle school band kids were out selling candy. It had snowed the night before, and he had been gone with kids sports and what not and had not shoveled the sidewalk yet. Sure enough, one of the kids slips and breaks his arm. The parents get some hotshot PI lawyer and try to hit my client up for $1million for "pain and suffering". Thankfully it was settled out of court for medical costs and a little more, but you get the idea...........

 

[FinanceDude]

You already have my opinion on the disability in your case. I only believe in buying insurance out of need, and not logic alone. My assumption, then, is no one needs the income from two doctors.

I would get an umbrella policy covering your gross income and a bit more; or just update it every so often as your gross worth increases. I dont personally have one yet, and maybe that isnt wise (my gross worth is just shy of 400K), but i do intend to get one eventually.

With respect to umbrella, I believe one's lifestyle has a lot to do with the importance of it. For instance, if you throw a lot of parties at your house, umbrella might be more important. If you work with people in any profession and you represent yourself (instead of, like, in my case where I'm the government, not me) then umbrella is more important. We're no doubt a sue happy country, but obviously, some people are going to be more prone to a lawsuit than others given one's lifestyle. On the whole, my lifestyle should lend itself to low risk for lawsuits. I dont think brewer, for instance, can sue me because i get under his skin daily.

And I think it's foolish to take that chance when you can get a $1million umbrella for $175 a YEAR.............probably not going to break you............

 

[brewer12345]

And I think it's foolish to take that chance when you can get a $1million umbrella for $175 a YEAR.............probably not going to break you............

But purple unicorns do it for free.

 

[FinanceDude]

But purple unicorns do it for free.

Gotta get me some of those..........are they made next to the pink flamingo plant?

 

[brewer12345]

Gotta get me some of those..........are they made next to the pink flamingo plant?

The petting zoo for the purple unicorns is in the capital of Az-land.

 

[FinanceDude]

The petting zoo for the purple unicorns is in the capital of Az-land.

Kind of like a reality show with Monte Python characters?

 

[azanon]

I'm trying to figure out which part of me acknowledging that "maybe it isnt wise (that i dont have an umbrella yet)" you guys didn't understand? Further, i recommended the umbrella to Scout. Umbrella is great insurance to have, and its important.

I have 100/300 of bodily injury on my auto insurance, and 50K of property damage (on the auto policy) so i'm not completely exposed there.

 

[Martha]

I split off the will discussion into a new topic.

 

[saluki9]

An umbrella would also be wise, since your mere profession puts dollar signs in would-be plaintiff's eyes. Umbrella policies are relatively cheap (hundreds a year for multi-million dollar policies).

I agree with Brewer except for the part above. Your ubrella will specificly exclude anything relating to your profession.

 

[brewer12345]

I agree with Brewer except for the part above. Your ubrella will specificly exclude anything relating to your profession.

No argument from me on what umbrella covers. What I was getting at is that the man on the street assumes doctors are wealthy and therefore is more inclined to sue versus, say, a janitor.

 

[FinanceDude]

No argument from me on what umbrella covers. What I was getting at is that the man on the street assumes doctors are wealthy and therefore is more inclined to sue versus, say, a janitor.

Agreed.............

 

[donheff]

I have carried a $2M umbrella policy for years. It is not a matter of covering your assets - if an award was big enough it could burn through all of the umbrella coverage and still eat your ass(ets). You have to make a guess as to what is the largest likely judgment you would get against you if something terrible and unexpected happened. E.g., you got a bit tipsy at a party, drove off drunk, rammed into a car with your Ford Pinto, and the resulting inferno burned up a couple of infants ; or you slugged the obnoxious neighbor who pushed your kid and he falls, jams his head into the curb, and is paralyzed from the neck down.

As long as the insurance is pretty substantial the insurance company lawyers will be motivated to offer a good settlement to make sure something like the above doesn't get before a jury of your goofy peers.

 

[brewer12345]

Heh, I always figured that the nightmare scenario was to rear-end a bus full of personal injury lawyers.

 

[Scout]

Do you guys have more suggestions regarding which companies to go with?

 

[brewer12345]

Do you guys have more suggestions regarding which companies to go with?

You talking about DI? Like I said: MassMutual, Northwestern Mutual or Guardian. There aren't a lot of companies that sell this product and of the oones that are left, these are the best.

Why do I suggest these companies? Simple. They all have very high credit quality, so you can be sure they will still be there in 10, 20, 50, 100 years. They all have been in the DI business for a long time and will very likely stay in the business. They all have a long track record of doing (relatively) well by their policyholders. And they are all mutuals, which means that they are owned by their policyholders and don't have to answer to stockholders.

I spent several years doing nothing but analyzing the credit quality of life insurers. I had insider access to many companies, including some ofthe biggest players in the industry. Based on my experience, there are some I think highly of and others I wouldn't touch with a stick.

 

[Nords]

Heh, I always figured that the nightmare scenario was to rear-end a bus full of personal injury lawyers.

That's bad enough, but I thought the worst case was a bus full of the children of personal injury lawyers.

A lot of policies overlook this in their car insurance's uninsured/underinsured motorist coverage. Spouse and I are theoretically covered for lifetime healthcare under the military's system, but our kid is not. If we went under an Armada and she lived with lifelong disabilities then I'd like to know that there's the possibility of recovering enough to fund the cost of her care. When she's old enough for USAA to split her off our policy then we'll drop the UM/UIM.