Disability Insurance

[Frenchy1011]

My employer currently provides a 60% of my basic monthly earnings for my Group Long Term Disability Insurance Plan.

 

My question is I should pay to get an addition policy to add 20% to that to get to a total of 80% of my monthly earnings. Is this something that is reasonable, or something that is a silly add on?

 

Thanks.

[VagabondMD]

Early in my career I added an individual policy on top of the similar group policy provided by my practice. Later in my career, when I no longer needed the difference, I dropped the more expensive individual policy.

There may be other opinions, but by my own actions, I can attest that I believe you are being prudent, not silly.

[Frenchy1011]

Vagabond MD wrote:

Early in my career I added an individual policy on top of the similar group policy provided by my practice. Later in my career, when I no longer needed the difference, I dropped the more expensive individual policy. There may be other opinions, but by my own actions, I can attest that I believe you are being prudent, not silly.

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Great thanks for the response!

[Scott at MD Financial Services]

It totally depends on you.  Do you want more coverage than 60% - taxes and offsets are going to provide?  Do you know the actual terms of the policy that will determine how it behaves at claim time?  By adding the 20% add on does it make the benefit exceed their max issue?  Most group products will say something like 60% of income not to exceed $10-$15k, if you push up to 80% does it exceed the max benefit?  If so are you then paying for something you can't get?  Do you want to be protected truly in your specialty regardless of what you might go do in a post disability world?  Be sure to read the Policy and not just a 1-2 page sales brochure that is made up for you and the front office admin.  There are some good folks on WCI that can read that group policy and let you know exactly what you have and how it is going to work at a potential claim time.

[Frenchy1011]

Scott @ MD Financial Services wrote:

It totally depends on you. Do you want more coverage than 60% – taxes and offsets are going to provide? Do you know the actual terms of the policy that will determine how it behaves at claim time? By adding the 20% add on does it make the benefit exceed their max issue? Most group products will say something like 60% of income not to exceed $10-$15k, if you push up to 80% does it exceed the max benefit? If so are you then paying for something you can’t get? Do you want to be protected truly in your specialty regardless of what you might go do in a post disability world? Be sure to read the Policy and not just a 1-2 page sales brochure that is made up for you and the front office admin. There are some good folks on WCI that can read that group policy and let you know exactly what you have and how it is going to work at a potential claim time.

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So I actually current have an addition separate individual policy of 20% that would be added to the 60% provided by my employer group policy.

The group policy states that it provides 60% of basic monthly earnings to a maximum monthly benefit of 15K.

The policy would pay be until age 65 if I go on disability prior to age 60, and then if I get on disability after age 60 it is incremental all the way up to age 70.

[Scott at MD Financial Services]

Take a look at the definition of your elimination period, do you see the words Total, Continuous, Completely in there?  Read the definition of disability, does it have a time period to send you back to work, does it say "and not engaged"?  Look at the offsets to the benefits to be paid, most will have dollar for dollar reduction for Social Security, Workman's comp, no-fault insurance, retirement plan distributions, some even for other group or association plans.   How often can they change the terms of the policy?  Once you have that information and understand it if you are ok with it then you are in good shape, if not then visit with someone that can help.

[Frenchy1011]

Scott @ MD Financial Services wrote:

Take a look at the definition of your elimination period, do you see the words Total, Continuous, Completely in there? Read the definition of disability, does it have a time period to send you back to work, does it say “and not engaged”? Look at the offsets to the benefits to be paid, most will have dollar for dollar reduction for Social Security, Workman’s comp, no-fault insurance, retirement plan distributions, some even for other group or association plans. How often can they change the terms of the policy? Once you have that information and understand it if you are ok with it then you are in good shape, if not then visit with someone that can help.

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I will look into this. Thank you.