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Advice on Disability Insurance / Life insurance

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  • Advice on Disability Insurance / Life insurance

    How important is it to have supplemental life and disability insurance outside of what I already get through my employer? I know the insurance is only valid as long as I am employed by my employer but would it matter if I just waited to get supplemental life and disability insurance if/when I switched jobs assuming my new employer's benefits are not as good?

    This is what I currently get through my employer: Disability - $15,000 monthly benefit ; Life - 1x annual base salary (up to $1 million)
    More about me: 34, married with a spouse who is also employed and gets good benefits through her employer. We are expecting our first child early next year.

    Thanks in advance for the help!

  • #2
    it's very important. you need supplemental LTDI and should get term insurance for you and your wife at a reasonable cost. What would you do if you get disabled and can't work for 6 months and then your employer lets you go, and you die a few weeks later? so much for your then-former employer giving you life insurance

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    • #3
      You definitely need more term life insurance. 1x your annual salary is inadequate when most rule-of-thumb estimates are ~10x annual salary.

      $15k/month disability is a good amount IMO. The question is how easy/willing is the disability carrier willing to pay out and that's a tough one to answer. You also have the issue whether both policies will pay full value. Have to look at the policy language.

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      • #4
        https://www.whitecoatinvestor.com/wh...ity-insurance/

        Compare the actually policy for the employer plan to your own purchased occupation plan. Btw, the employer paid is taxable, and the definitions and what you would receive are likely substantially different.

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        • #5
          Most employers don't read the policies they are buying that are then extended to their employees so they have no idea how it really works other than a brochure that is typically less than complete. Did you by chance happen to read the policies terms that you are expecting to take care of you if you had a disability? These contracts can vary quite a lot from the terms of the waiting period, the actual written definition of disability, how the partial works, what benefit compressions exist, if it is taxable, is it portable if you need to leave this employer but have a health condition at that point, and so on. It is kind of like buying a car, you would probably never buy a car without knowing if it is 2 door or 4, if it could only hold 2 people or if it could carry 6+, new vs. used, or if it has 30 year old safety equipment vs. the latest with front collision warning and auto breaking. My point is you need to know how that policy is going to behave at claim time to make sure it is going to meet your expectation of performance rather than have it be a surprise.
          Scott Nelson-Archer, CLU, ChFC
          303-953-0263 Direct / [email protected]

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