LTD (Long Term Disability)

[escape_nyc]

I am new here. Have searched messages to look for this info but haven't really found a lot of discussion. Do most people have LTD insurance? I have been told that it is far more important than life insurance. I agree on its importance, however I am perplexed by how expensive it is. It seems almost unaffordable for most people. In my particular example, a decent LTD policy costs about $3k (after taxes) a year to insure an income of about 100k per year. I am in my early 30s and in good health. That amounts to about 5% of after tax income. Speaking to insurance agents only makes thing more confusing. Most have no idea about the very policies they want you to underwrite when you ask complex 'what-if' detailed questions. They just want you to pay up so they can earn outsized commissions. Even the good ones really drive home the fact that you NEED this type of insurance as you are more likely to get disabled than die before retirement age and so you need to insure your income to maintain your lifestyle and pay for extra medical expenses that may not be covered. What are your experiences and thoughts?

 

[73ss454]

I paid for LTD for over 25 years and was lucky enough not to ever need it. I let it expire when I retired at 57. I think it was about 6K a year. I still hold a whole life policy but since it's not something I need at this point I'll be moving it to cash or a SPIA in the next few years. Don't get tricked into buying a whole life policy if you're thinking about it or your broker thinks it's a good idea, buy only term for the LI.

 

[escape_nyc]

Thanks Rewahoo. I am asking about LTD NOT LTC.

 

[REWahoo]

Thanks Rewahoo. I am asking about LTD NOT LTC.

Oops..

YouTube - ‪Gilda Radner Nevermind‬‏

 

[brewer12345]

I regard LTD as a must, perhaps even more important than life insurance (it is certainly more likely to be used for younger folks). Shop around and deal with a large, strong, highly rated (at least AA-/Aa3) insurer, preferably a mutual.

 

[DblDoc]

+1 on necessity. Be sure it pays out appropriately. In medicine you need to get "same specialty" coverage - and it will be more expensive depending on your specialty. Otherwise they pay out based on the lowest paid physicians (eg Pediatrics or Family Practice).

DD

 

[escape_nyc]

So companies like Metlife, MassMutual, Guardian, etc. are decent?

I regard LTD as a must, perhaps even more important than life insurance (it is certainly more likely to be used for younger folks). Shop around and deal with a large, strong, highly rated (at least AA-/Aa3) insurer, preferably a mutual.

 

[Telly]

......... What are your experiences and thoughts?

I had LTD that I paid for through the megacorps I had worked for. The premiums were reasonable. It would have been a GROUP-based LTD plan. Sounds like you are looking at an INDIVIDUAL LTD plan.
So wouldn't it be the individual vs. group insurance issue, just like Health Insurance?

 

[brewer12345]

So companies like Metlife, MassMutual, Guardian, etc. are decent?

Due to professional issues, I cannot comment on specific companies. That said, when I buy long term insurance policies, I look for big, strong comapnies, preferably mutuals. But many others buy from different companies with success.

 

[Alan]

I always carried LTD through my employers. The chances of being sick or injured and missing long stretches of work are WAY higher than if you died, so yes, imo LTD is more important than life insurance.

 

[braumeister]

As with most things, where you stand on this depends on where you sit.

For both DW and I, once we got to a position of FI, and within about two years of early retirement, LTD no longer seemed worth its cost.

But before that point, yes, it's extremely valuable and important.

 

[SunsetSail]

Employer provides 50% LTD up to age 65. I pay a small amount extra (couple hundred a year) to increase that to 70%. It may be overly conservative because we live on about 50% of my salary, but the cost is so small I elected the extra coverage. I will keep the coverage until I am FI. It helps me sleep at night because the probably of becoming disabled is much greater that life insurance kicking in at my age.

 

[Webzter]

Hmm, this thread has me thinking I had better go shopping. Had it to 60% with last employer (well, three employers ago) and bought up to 70%. Running naked now. Sounds like the premium payments will kill me though! (at least the term life will pay out then)

 

[tmm99]

I get mine through my employer also and the payment is not too bad although I believe the payment goes up as you get older.

 

[chinaco]

IMO - LTD is important.

I guess I have been fortunate. I have always had it as a company benefit. But... I have mostly worked for mega corps.

If you ever change jobs, you should look at more than just salary... consider the value of the other benefits also.

 

[BradMM]

DW and I have discussed because Financial Planner lady said it's a must. We decided against it. Maybe a mistake but, like with insurance, you never know until AFTER it's too late but we couldn't see paying those premiums when we'd both be perfectly happy with a trip to some place where assisted suicide is legal if our quality of life declined to that point. May have a different perspective if I get to that point but that's how we see it now.

 

[lemming]

Remember that LTD is meant to cover the replacement of an income. once you retire there is no income to replace.

I left work under medical issues. The LTC did not kick in while I had vacation time coming and then counted 90 days after that. So , since I was terminated before it kicked in, I only collected the 3weeks in that time frame. YMMV.

 

[escape_nyc]

Well it's the horror stories online that scare me. If I am going to spend 5% of my income as protection, the last thing I want to deal with when I am disabled is a megacorp insurance company that is doing anything it possibly can to not pay benefits. I'd rather be uninsured and take my chances.
The problem with relying on your work's group LTD plan is that you are stuck with a company that could be unreliable (most companies in the LTD insurance space seem dishonest), your benefits are taxed, and you lose the entire plan when you leave your job or are terminated. If you have no LTD insurance and want to get some when you are in your 40s or 50s it is very expensive (assuming the company decides to underwrite in the first place) and will not cover pre-existing conditions.
Financial planners, insurance agents, etc. will scare the hell out of you describing your circumstances if you don't get LTD and convince you its foolish to not have any, yet I find that most (if not all) of my responsible friends and colleagues have never even heard of this stuff except for physicians/doctors.

 

[brewer12345]

Go naked if you like. I personally only insure things I cannot afford to easily cover. So I do not bother with collision on my crappy old cars, but LTD, life insurance and umbrella are a must.

Pick your insurer carefully and your risk of problems if you ever have to make a claim are reduced. Yep, a quality company will probably cost more, but you get what you pay for.

 

[Purron]

DH and I are now retired, but never carried LTD insurance during our working years. We don't have kids and always made similiar salaries, so it didn't seem critical. Plus, we've always been very frugal so didn't have debt or expenses that one of us couldn't handle. If something happened to one of us, the other could have hung in there just fine.

For a family with kids and one major breadwinner, I'd say it's pretty dang important.

 

[Webzter]

For a family with kids and one major breadwinner, I'd say it's pretty dang important.

Or, in my case, no kids but I'm the breadwinner and I'm shopping for a chainsaw

Guess I'd better get on that.

 

[Purron]

Or, in my case, no kids but I'm the breadwinner and I'm shopping for a chainsaw

Guess I'd better get on that.

Oh geez. Chainsaw? I'm afraid to ask "what for?".

If you're from Texas, I'll be freakin' out

 

[Webzter]

Oh geez. Chainsaw? I'm afraid to ask "what for?".

If you're from Texas, I'll be freakin' out

Oh, nothing huge. we had 7 trees felled and they left the pieces in chunks ranging from 12" (good) to 3' (per contract, but need to be cut down to size).

and, no, no plans on becoming a psychopath in the woods... although, I suppose if I were a psychopath, I probably wouldn't say. Sort of a prisoner's dilemma here.

 

[Purron]

Oh, nothing huge. we had 7 trees felled and they left the pieces in chunks ranging from 12" (good) to 3' (per contract, but need to be cut down to size).

and, no, no plans on becoming a psychopath in the woods... although, I suppose if I were a psychopath, I probably wouldn't say. Sort of a prisoner's dilemma here.

Whew! Thanks for the follow up Webtzer. DH and I have had a number of trees come down too and he's had his chainsaw out to saw them up.

Peace brother

 

[BradMM]

All you chain-sawers, are you in tornado territory?

HOPE NOT!