Let Long Term Disability Policy Go?

[meleana]

Hubby has had a private long term disability policy for a long time. It renews again in a week (march7) and his 65th birthday is in April. He is still working full time- until next year when he is 66.


Because he doesn't turn 65 until a month after the renewal of the policy, the premium stays the same, which is $1529 for the year.

However- the benefit ($2000 per month- must not be able to ANY job. (He commutes and has a desk job)) would only last for 2 years should he heaven forbid need it.

Plus there is a 90 day waiting period.


Next year- he won't be working so the policy would not be in force anyway. Even if he continues working the premiums would go up at that point.

So we took this expense out of our budget, but I keep overthinking it.

His term life insurance policy is also ending and we took that out of the household budget as well. The insurance agent send quotes where he could continue term insurance with other companies, but he would be getting a lot less insurance for higher premiums.

We decided to just pay for the insurance his employer provides- 1X his salary of 82,600 plus AD&D coverage. (His employer used to pay for it- but eliminated that benefit this year. We figured since he always had it with them for 22 years we would just pay for it- again- kind of expensive for a low benefit- but at least it is something).

I keep overthinking it.


Thoughts?

 

[pb4uski]

Go back to basics.

If your DH were injured and unable to work, would you NEED those DI benefits to survive? If yes, then you need the DI policy. Would the DI benefits be nice to have? If yes, then is it nice enough to have that you are willing to pay $x for that insurance coverage then go ahead and buy it.

If the answers are both no... don't need and would be nice to have but not worth the cost... then drop.

Same questions for the life insurance.

 

[38Chevy454]

In general, insurance is to provide for the things you are not able to reasonably cover out of your savings. In your example, $2,000/mo benefit x 24 months is $48,000 potential max insurance benefit.


Can you handle a $48,000 hit to your savings? That is how I would decide on the decision.


Your second question on term life, related answer that the insurance was (supposedly) there to provide for the missing income due to dying. Now that you and DH are near or at retired status, is there a need to keep that potential disability insurance, can you get by on your savings without that insurance money? Some people maintain the life insurance to provide a benefit to heirs. That is also a fine answer, but is it worth the expense? That is your choice to make.

 

[Aerides]

Read the details in your policy, LTD is quite often rather difficult to claim. My employer offered it at a pretty low cost so I kept it when working, but would not consider a private policy. You don't mention the cost but I'm assuming it's at least $50 per month.

I think LTD is great for when working and needing income, especially if you get it linked to income and through your employer, since most employer short term/fmla/job coverage runs out at 90 or 180 days. I carried the max which was 60% of income for around $25 per paycheck.

In your case I would drop it now.

 

[gwraigty]

I think of long-term disability as being useful in cases when there would be no other source of income that would allow one to eat and keep a roof over one's head. In your case, if the job income were to stop, there's Social Security. I can't see paying for a policy that limits benefit to 2 years in any case. Since he's going to be retiring within the next year, it doesn't sound as if you'd be hurting for the money in the meantime.

For the life insurance, a similar analysis. Would the basic $82,600 make a significant difference in your ability to eat well and stay warm and dry?

 

[marko]

When my brother had a massive stroke, I was surprised to learn that he had chosen to take LTD from his employer...a few bucks a week or something like that.

They were awesome and not only paid his salary for two years but also completely facilitated and paid a lawyer to fast track his application for SSDI. When the time came, I took an hour to fill out an online form and they did the rest; within a month or two he had SSDI.

Of course they had selfish reasons but they did their job.

 

[meleana]

Read the details in your policy, LTD is quite often rather difficult to claim. My employer offered it at a pretty low cost so I kept it when working, but would not consider a private policy. You don't mention the cost but I'm assuming it's at least $50 per month.

I think LTD is great for when working and needing income, especially if you get it linked to income and through your employer, since most employer short term/fmla/job coverage runs out at 90 or 180 days. I carried the max which was 60% of income for around $25 per paycheck.

In your case I would drop it now.

Oh- right, I forgot to say that it is a $1529 annual premium.

 

[Chuckanut]

Most young people are far more likely to be disabled for a long term than to die.

Unlike death, which usually reduces the family's expenses, a disability often increases a family's expenses.

I had both life insurance and disability insurance when I had young kids. After the last child set out on his/her own I got rid of the life insurance. I kept the disability insurance until I got within three years of 65 (at which point the company would no longer insure me or pay me).

 

[COcheesehead]

I carried a private disability policy for years. I saw a neighbor, a lawyer, get cancer and was unable to work. He didn't have disability insurance and it put a big burden on the family.
Now that I am older and just a step away from retiring, I figured I no longer needed it since I had a pile to live on. So I canceled the policy a year or so ago. Saved me $1200/year.

 

[Sunset]

I believe in LTD insurance, as I saw how useful it was to my parents, with Dad on it for 10 yrs.

However, in OP's situation, with 1 more year to cover, and 90 day waiting period, so less than 2 yrs max coverage, and he is going to retire in 1 yr. I don't see much value.

Unless of course he is having chest pains right now.

Everything in life is a gamble or weighing of the odds, but even if he became disabled without this coverage, he could apply for SS disability immediately.

So I vote, get rid of it and save the $1,529 premium.