Should I cancel my disability insurance?

[disneysteve]

I am not retired yet.

I have always carried private disability income insurance. It was never a benefit of my job. I currently pay just over $300/month for it.

However, my current job includes it as part of my benefits package. I get 66.6% of my base salary up to $15,000/month.

I don't have a definite retirement date in mind yet but I'm aiming to be done by the end of 2022 (and possibly sooner depending on how things go).

Is there any reason why I should keep my private coverage at this point? I'd love to drop our expenses by $3,600/year.

 

[Dtail]

Well if you get disabled in the next year, are you fine to live on the potential payout?
I also had a similar setup as you, but cut the insurance right at retirement.

 

[disneysteve]

Well if you get disabled in the next year, are you fine to live on the potential payout?
I also had a similar setup as you, but cut the insurance right at retirement.

I had planned to drop it at retirement, but I honestly never paid attention to what my job offered until now. The payout from the job plan would be perfectly adequate at this point. It's not a huge amount either way if I do retire within the next 18 months but if we can save a few thousand, why not.

 

[rodi]

I would cancel it. If you have two policies - will both pay out - or will one be secondary to the other? If you plan to (and have good odds at) keeping your present employer till you retire... I'd drop the coverage.

 

[Dash man]

No need for two policies. What age do they pay to? It’s intended to replace income you need if you can’t work anymore. Do you need it?

 

[RetireeRobert]

Cancel it. Should not even be a question. If you could cancel it retroactively that would be even better.

 

[Sunset]

Self paid disability insurance is tax free when paid out.

Employer paid disability insurance is taxable income when paid out.

I always paid my own way for disability insurance, even when the employer offered to pay it.
The chance of being disabled is much higher than dying, and you have to live with the disability, whereas being dead is not a bother for the actual person.

It's possible OP is paying too much for disability insurance thinking it's taxed (and of course OP should check with the insurance company about the taxation as States are different and times change)

 

[mrfeh]

Is there any reason why I should keep my private coverage at this point?

No.

 

[pb4uski]

+1 Once you are FI you can drop it.

 

[someguy]

Have you carefully read the details of each policy? Some of those plans vary widely. I know you want to make sure it's "own occ" so that you aren't disqualified because you can't do your original job any more but would be able to work as a burger flipper for minimum wage. You also want to make sure they are equivalent (and sufficient) in terms of how long they will pay out.

 

[Mark1]

+1 Once you are FI you can drop it.

+1.
I dropped mine 4 years prior to retirement as I was FI at that point and only really working for MegaCorp retirement benefits, i.e., medical/pension.

 

[disneysteve]

+1.
I dropped mine 4 years prior to retirement as I was FI at that point and only really working for MegaCorp retirement benefits, i.e., medical/pension.

This is largely my thought. I'm planning to retire soon. I have coverage through work. And ultimately we'd be okay if I didn't get any disability payout if something were to happen.


We're actively dealing with a dying family member so I'm not going to address this anytime soon but once all of that is behind us, this is on my to do list.

 

[Chuckanut]

My disability plan only paid to age 65. I guess they figured SS would replace it.
In my late 50's when I had achieved FI (except for medical insurance) I let the policy lapse. I am thankful I never had to collect a penny.

 

[jazz4cash]

Deleted pist

 

[RetMD21]

I dropped mine shortly after hitting FI but kept working