Comments on: Do I Need Long Term Disability Insurance?

By: Sheila

Sheila — Sat, 30 May 2009 15:11:14 +0000

As someone who is on social security disability, people should know that in many cases, it’s extremely difficult to qualify for SSD and usually people are rejected the first time. I qualified the second time I applied, when I was over 50–I think the combination of 1) being better prepared with my application and 2) being over 50 is what helped me get SSD. Someone mentioned $1500 – $2000 for SSD. I wish! Because of taking time out to care for children, I had a spotty work history so my amount is very small.

By: Noelle

Noelle — Sun, 24 May 2009 01:50:52 +0000

I know this is an old post, but I’m a new reader to this blog, and I just started working as a financial adviser for MassMutual, so I came across this post because I’m researching how people feel about disability insurance. One thing I noticed none of the other commenters mentioned: when you have disability insurance through work, you usually don’t own the policy. That means you can’t convert it when you change jobs, and you have to pay taxes on the income, making your 60% salary even lower. (And that’s 60% of your pre-bonus and overtime pay.) If you buy your own policy, the monthly payment is tax-free, and you own it for as long as you pay your premiums.

If you want to save money on the policy, a good rep can find a way to do it by lengthening the elimination period, or taking into account the partial payments you may be getting from work. Also if you buy from a mutual company (like mine), you will likely receive a dividend on your policy. We also rate our policies as “own occupation” which means that as long as you can’t do YOUR job, you get the benefit. If you want to rely on Social Security, it’s “Any Occupation” which makes you SOL if you can still flip burgers.

By: Kim

Kim — Fri, 22 May 2009 16:20:58 +0000

I was recently diagnosed with cancer and had to go out on medical leave. I’m most grateful that I have a disability policy that includes a caner benefit! I’m totally out of sick leave and being a teacher, our district doesn’t have a “leave bank”. Before I left to go out on leave I wrote an e-mail to the staff begging them to get screened, cancer doesn’t run in our family, and to purchase the insurance. I can’t stress it enough! There’s no such thing as “I can’t afford it”. Nobody can afford NOT to have it. The premium for such a policy is pennies compared to the financial disaster I’d be in if I didn’t have coverage. I’m also single and own a home, too. Remember, your expenses go on. Not all jobs have “leave banks: which I feel are wonderful ideas but not practical. Also, I found out that donating to a “leave bank” is strictly voluntary and there’s only so many hours/days that a person can donate. Our district doesn’t have a “leave bank” because of concerns regarding how it will effect people’s retirement. As somebody stated in a previous posting, a disability can also result from a car accident or an accident at work, as well as an illness. Please don’t gamble on the notion that “It will never happen to me”. A disability is something that can happen to anybody.
What a disability policy does is “plug up the holes” if you don’t have an emergency fund or your funds run out. Medical insurance pays for treatment, but it doesn’t pay the mortgage or buy the groceries.

Take it from those of us who have been there, buy the long term disability insurance. The home, the relationship etc. that you save will be your own!

By: Beth

Beth — Mon, 09 Feb 2009 23:22:35 +0000

Please be advised that that 1 in 7 who are disabled for more than 90 days includes women who take off after a pregnancy. If you subtract out the normal pregnancy time off, it’s a very differnt number, which is very difficult to get since only the insurance companies have tracked the info.

By: Byron Udell

Byron Udell — Wed, 18 Jun 2008 16:22:01 +0000

Here are some facts as to why you should have long term DI.
•Odds of a disability are nearly 3 times greater than death between the ages of 25-65
•At age 37, the odds of becoming disabled are 3-1/2 times higher than that of death
•1 in 3 Americans age 35 to 65 will suffer a disability lasting at least 90 days
•48% of all home mortgage foreclosures are due to a disability – only 3% are due to a death of the breadwinner
•1 in 4 families that filed for bankruptcy protection identified an illness or injury in their family as the major reason for the bankruptcy

By: dj

dj — Tue, 27 May 2008 20:00:56 +0000

My sister has recently been diagnosed with a nasty form of leukemia at age 61. She did not take LTD with her employer and is now looking at a very shaky financial future. Poor choices made just because you are healthy NOW may really impact your future! I have always taken LTD and have now reached the stage in life where I will start taking the “buy up” offered by my employer at our next open enrollment.

By: Dawn

Dawn — Tue, 27 May 2008 19:30:09 +0000

In the past year, I have had 3 friends under the age of 35 become totally or near totally disabled. Two contracted cancer and one was injured in a motorcycle accident. Afterwards, each has told me or my husband that they really wished they were covered because not only have they lost their own income, but they now have significant medical expenses that their spouses or families have to cover. Bankruptcy is crossing the minds of the two who are married. Oh, and these are people who were well prepared for “normal” emergencies, had substantial life insurance, and were otherwise financially responsible.
I will never understand why people think life insurance is a necessity, but disability insurance is not. At least if you die, no one is stuck having to care for you at significant personal and/or financial cost to themselves or your family. With a disability, it isn’t just the loss of income, it’s the increase in expense, too. Nothing gives me more peace of mind every month than knowing I am fully insured in this area and my husband is too. It’s one bill I’ll gladly pay.

By: George

George — Tue, 27 May 2008 15:39:45 +0000

“For example, the American Council of Life Insurers claims that one third of all Americans between the ages of 35 and 65 will become disabled for more than 90 days.”

After working for 15 years with the same employer, since age 30, it seems that as coworkers hit age 45-55, they’re BOUND to need surgery and a 90-day recovery period. I’m actually surprised that the number is only 1/3.

By: Beth

Beth — Tue, 27 May 2008 13:12:48 +0000

Primerica is another great company. Check out the rates and service. Yes, I am a licensed rep.

By: Beth

Beth — Tue, 27 May 2008 13:11:46 +0000

you can also check out the rates with Primerica. Very competitive rates and excellent service. Yes, I am a licensed rep. Check it out.

By: Sharon

Sharon — Tue, 27 May 2008 02:28:22 +0000

The costs of replacing the services provided by a stay-at-home parent are staggering, too, and BOTH partners need disbility insurance. It is available, and people need to have both employer provided and a private disability policy. Relying on the employer policy doesn’t work if you are laid off the day the bus hits you.

Under NO CIRCUMSTANCES buy disability insurance from Unum-Provident. They have a long and disgusting history of denying claims and abruptly stopping payments in the outside situations where they start.

If your employer purchases coverage through Unum-Provident, do your research and get them to change to an honest provider.

If you are in good health, line up a policy TODAY. It takes very little to become uninsurable, and in all fairness, if you try to game the system by waiting until you have symptoms you are just plain cheating.

Also, when you buy life insurance, if you are offered a disability rider, where they will pay premiums should you become disabled, sign up for it. It is very cheap and can save you a fortune. My husband became totally disabled 9 months after getting life insurance, and hasn’t paid a penny in premiums since.

The other thing to be careful of is to get ENOUGH disability insurance. Your expenses will go up, and if you can get a policy that will let you raise the limits later it will be a major difference in your financial survival.

By: jtimberman

jtimberman — Mon, 26 May 2008 23:07:24 +0000

Trent,

Get a quote from Zander Insurance[1] – endorsed by Dave Ramsey[2] for long term disability insurance and more (life, id theft, etc). They draw quotes from dozens of insurance companies, at very good rates. I was able to get LTD @50% of my salary (which is pretty decent) for about $500 a year.

As someone else pointed out, LTD is the most underinsured area, so don’t delay and go to Zander for a quote.

[1] http://zanderins.com/ – click instant disability quote

[2] Dave believes LTD is so important he buys it for all his employees as a benefit.

By: Trent

Trent — Mon, 26 May 2008 19:12:59 +0000

“My iPod”, if you read the rest of the article, you’d realize I came to the same conclusion. The “short term” part means that I have a very large emergency fund that could fuel us through at least a year, so I don’t need to get LTD insurance that takes effect immediately – I can get some that takes effect after a few months.

By: Michelle

Michelle — Mon, 26 May 2008 17:32:36 +0000

i have been researching various companies for awhile. it was difficult to find a broker/ agent that sells disability insurance or get a straight answer. i found Met Life very helpful. i will be signing up with them as we speak today.

By: My iPod

My iPod — Mon, 26 May 2008 17:06:46 +0000

[i]Could I afford the consequences of not having long term disability insurance? A quick examination of my finances says yes – but only over a fairly short term.[/i]

Trent, if your answer is “yes, for a short term,” then the answer really is no, you can’t afford it.

Think of it this way: Can you afford to live at the Four Seasons? Maybe for a week, which means, you can’t afford to live there. And with a long-term disability, you can’t check out and go home.

By: PJK

PJK — Mon, 26 May 2008 17:02:41 +0000

Thanks for the post. I’m curious to know about LTD policies for stay at home moms. I was kind of laughed at when I asked HR at my last job about whether I could continue the LTD policy on my own when I left (along with COBRA, etc.), and she said she’d never heard of an unemployed person having LTD, but think about it…

1) If I’m disabled and can’t take care of the kids, we need to pay for day care on top of all the other expenses of my disability.

2) I may not have a job now, but I have a Master’s Degree and 10 years of experience in my field and plan to resume work in my field when my kids are older. But what if I become disabled in the interim and am never able to return to my field? Is it just my bad luck that I happened to become disabled in the few years I was a SAHM? If I was a working mom when I became disabled, I’d still have the LTD coverage through my job. The financial plans of many families with SAHMs include the assumption that Mom will resume work at some point to help with college and other expenses, and we can’t all afford for Mom to never go back to work.

My husband has an LTD policy through MetLife (continued after leaving a prior job) but I need to look into it to see about the job specific provision mentioned in other comments. That was a really good point I hadn’t thought of.

By: Julie

Julie — Mon, 26 May 2008 13:52:15 +0000

LTD and Long Term Care (LTC) insurance are both a must have in my opinion. I watched my supervisor and friend both be diagnosed at 40 (and healthy and training for triathilons) with ALS (Lou Gehrig’s disease) and die in a matter of a few years. Without these two insurances his family would have gone bankrupt several times over caring for him. It gave him a huge piece of mind knowing that his family would be well provided for with his life insurance and that during his demise they were all well cared for.

By: MCC

MCC — Mon, 26 May 2008 07:53:22 +0000

As someone whose job involves a somewhat higher risk for injury (I’m a chemist), I carry both ST and LT disability. It costs about $40/month total (it is a cafeteria benefit at work–i.e. I have to pay for it). While I don’t have dependents, my care would fall to my elderly parents so whenever I am tempted to cancel it, I think what would they do if I didn’t have some money coming in and was disabled? Not a pretty picture.

By: NED

NED — Mon, 26 May 2008 05:17:05 +0000

The first question thus becomes could I afford the consequences of not having long term disability insurance? A quick examination of my finances says yes – but only over a fairly short term. We’d be fine over the course of a year to eighteen months. Beyond that, things would get very difficult for my family.

Pardon the long post, I am curious at how you came by your conclusion. Most insurers I spoke to calculated the amount of insurance needed as the living expenses of each dependent multiplied by the term of disability, and guessed at the medical bills needed for rehab. I think a post of how you analyzed your insurance needs in detail would be a useful guide for the rest of us.

Firstly, how do you factor medical bills into the coverage, is there some ballpark figure to use or is it an average?

Secondly, as a single I would be the only dependent in case of disability. If it is a temporary disability, my emergency fund can cover basic expenses for up to a year so paying a premium for something I am able to provide for myself seems superfluous?

I am unable to find any plans that cover the vulnerable period beyond the first year. Are there such plans?

By: Joel Falconer

Joel Falconer — Mon, 26 May 2008 04:39:19 +0000

I have a disabled friend who says that the rest of us are “temporarily abled.” He’s right. If you can afford the insurance in the first place, it’s probably worth it. The disabled don’t get much help in our society, so it’s good to have that on your side for if (when!) it does happen.