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continue converted long term disability policy?

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  • continue converted long term disability policy?

    I'm eligible for FERS disability retirement, which provides the following:

    Benefits for the first 12 months of disability: $5,447.60/mo.

    Benefits after the first 12 months of disability: You are eligible for 40% of your high-3 average salary minus 60% of your Social Security benefit for any month in which you are entitled to Social Security disability benefits. It'll be less than $5,447.60/mo.

    Benefits after age 62: Depending on your number of years of service, you are either eligible for 1% or 1.1% of your high-3 average for each year of service.

    I have a converted long term disability policy from a prior employer. It costs $1,526.40 a year, and pays $3K/mo.

    That policy reads, "The amount of the Total Disability Monthly Benefit equals:
    1. your Basic Monthly Earnings multiplied by the Benefit Percentage (limited to the Maximum
    Monthly Benefit); minus
    2. Other Income Benefits.

    OTHER INCOME BENEFITS mean those benefits shown below:
    1. Any temporary or permanent benefits or awards for which you are eligible under:
    (a) Workers' or Workmen's Compensation Law;
    (b) occupational disease law; or
    (c) any other act or law of like intent.
    2. Any disability income benefits for which you are eligible under any compulsory benefit act or law.
    3. Any disability income benefits for which you are eligible under:
    (a) any other group plan, sick leave or formal salary continuance plan of the Employer; or
    (b) any governmental retirement system as a result of your job with the Employer.
    4. Any Disability Benefits or Retirement Benefits you receive under a Retirement Plan, as a result of your employment with the Employer who provided your Former plan.
    5. Disability Benefits under the Social Security Act, or any similar plan or act, for which you are eligible"

    Should I continue my converted long term disability policy, even though it may be decreased by FERS disability retirement? If I discontinue the converted long term disability policy, I won't be able to get it again, and individual policies are a lot more expensive. (An individual policy costs $4K-$10K per year, and pays $6K-$11K/mo. for 5 y.)

    I think I've saved enough to self-insure.

    Thank you!

  • #2
    Get a free analysis from one of the recommended ins providers - it will be worth it. Only a real financial plan can answer the question whether you've saved enough to self-insure (impo) but you s/b able to guesstimate pretty close .
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Thanks, jfoxcpacfp! Will do.

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