Apologies for a long post, but I want to include details I think are important when evaluating LTD insurance options.
Summary: I recently had to re-think LTD when I changed jobs. My advice based on that experience: do check sources of individual LTD coverage as an alternative to employee-paid supplemental coverage, but don't overlook checking to see if you are eligible for group LTD coverage as a member of a professional society or an alumni association. Both pieces of advice are particularly true if you are young. Also, don't just look at today's premiums in making your decision.
I'm 47, healthy, and the primary breadwinner for the household. DD's are 11 and 18. While we've made good progress toward ER via IRA's, 457's and other pre-tax savings, we're not far enough along in college savings or taxable-income savings to be comfortable with the "save your premiums" strategy suggested above. In my judgment, I need a healthy chunk of life and disability insurance for about another 10 years.
Previous Employer had supremo disability benefits: STD payments (that's short-term disability
) kicked in at 100% of salary after a week's absence, switching to LTD at 60% of salary after 90 days. Benefits continue at that rate until age 65. My premium was zero.
Current Employer has no similar STD coverage, just accrued sick and vacation leave as long as it lasts. They do provide all employees with zero-premium LTD coverage, but it's hardly comparable: 50% of salary, a 180 day waiting period and the benefits end 2 yrs after the start of the disability.
Even taking into account that SS disability payments might fill part of the gap after 2 years, if I stroke out tomorrow the free coverage is not enough to keep DW and the DD's on a reasonably steady financial course.
However, as in the OP's situation, Current Employer also offers employee-paid supplemental LTD coverage. The premium rate (call it x) is the same for all employees, young or old. Paying that premium will get me back to the exact same LTD benefits I had with Previous Employer: 60% / 90-day / age 65. Presumably, those premiums will be more or less flat for the 10 years I need coverage.
I compared the "x" premium to individual LTD policies I could find on the internet and to group coverage available to me through a professional society. I found that the group policy would cost a little less than x and the individual policy premium would be x plus some.
Here's what was interesting, however. Because both the group and the individual policies are age-rated (meaning the premiums go up as the policyholder's age increases) Current Employer's supplemental policy gets measurably cheaper than both alternatives when I turn 50. Ten years from now, the gap is much, much wider.
The converse is also true, from what I remember of the premium tables. Younger folks can benefit significantly from the age-ratings. If I was 37 and looking for coverage for the next 10 years, Current Employer's flat premium of X would be significantly higher in the early years, making the group or individual policy a better choice.
YMMV, of course.