Disability vs whole life insurance

[Kenrich]

Hello iI am a FP resident about to graduate i was wondering if its better to get supplemental disability insurance or a whole life insurance policy. Im 33 no kids not married and no house yet

[Dreamgiver]

Good DI policy from one of the major companies. Insurance people who advertise on this forum have been extensively vetted and those are the only people I'd buy from. In your position you are probably fine skipping life insurance for now (term life). Whole life is usually not a good idea.

[Arkad]

I would absolutely get Term now unless you know you will never have people who might depend on you financially.  I would not take the risk of developing some health issue before I wanted/needed life insurance.  TL is cheap enough that it is not worth that risk in my opinion.  I bought mine very early in my career and am glad I did as my ability to get underwritten later would have been harder (or more expensive)

[Jason Veirs]

To echo what others have already stated, I would definitely lock-in a Disability Insurance policy ASAP, as it is more necessary than life insurance given the limited information that you've provided. It will also be cheaper the earlier you lock it in, and you will most likely have a better chance of easily getting approved, without any exclusions on the policy.

Also, you DO NOT need Whole Life, and the only reason why you would possibly want to lock-in Term Life insurance at this time, would be due to the fact that you would be ruling out your health possibly changing within the time frame of now and when you have a wife/kids/house, etc. Although not likely, I've seen people become uninsurable within a very short period of time, so this is definitely something to consider.

I would also try to forecast where you're going to be within the next 5-10yrs or so, as if you plan on having a family, then you will most likely need Term Life insurance. Since you are so young the rates will not be too much different if you were to hold off on the Term Life insurance for now. Of course, as I've mentioned above, if your health changes and you don't lock it in now, you will be kicking yourself once, as the rates will be much higher if you can no longer qualify for the top Preferred Plus NT heath class. It's just a matter of how much risk you want to take on and what you're comfortable with - Of course, none of us have a crystal ball, which makes it difficult to know the right answer.

Please see Term Life rates below for a 33yr old, as well as a 36yr old. All of the quotes below are assuming the best/top Preferred Plus NT health/underwriting class, and your rates could be better or worse, depending on your H&W, medications, BP and cholesterol, family history, driving record, etc.

Age 33 Rates - $1MM, Preferred Plus NT:

20yr - $390/yr

25yr - $610/yr

30yr - $745/yr

Age 36 Rates - $1MM, Preferred Plus NT:

20yr - $455/yr

25yr - $690/yr

30yr - $861/yr

 

[The White Coat Investor]

Not sure you need either "supplemental" DI or whole life. Any reason you feel like your choice is either/or? Kind of an odd question that way.

Why not look at what potential financial catastrophes you could face in your life and buy insurance specifically for those events if possible to do so at a reasonable price? For example, a typical doc will buy a disability insurance policy, a term life insurance policy (if someone else depends on her income), a health insurance policy, a personal liability (umbrella) policy, a malpractice policy, and a property (house/auto) policy. Most other insurance policies are best avoided unless you are in some unusual situation.

[Kenrich]

I guess i was asking if i need both. When i said supplemental i meant in addition to what my job offers. I have been given mixed messages about getting a term life vs whole life? I was under the impression who can use your whole life insurance to invest. Sorry my terminology may not be correct as I am new to all of this

[ID Doc]

Look at the "Best of the Website - Insurance" sticky thread at the top of the Insurance section. You'll find all the links there for the details you need about whole life (don't buy it) and disability insurance (buy it). There are also links there for term life (arguable for you now that you don't need it if no one depends on your income, but worth thinking about the points Jason makes above). Congrats on posting here and getting yourself informed about these decisions before making them.

[Kenrich]

Thanks for all your comments. Crazy thing is I did apply for DI with principal through my FP i got denied because I had protein in my urine and turns out I may have focal segmental glomerulosclerosis. My luck huh??? My its hereditary and my dad has it but has not had any complications. My FP said if i have documentation showing im being treated and its controlled my rates should not go up too much but im sure they will! Any way I just had my Kidney bx and waiting on results after that I will try to reapply. Who would of thought a healthy 33 yo would be going through so many health issues.
But i know I need DI and will just have to obtainn it somehow.

PS: im sure thats more information than you all wanted about me but hey we're all family


Thanks!!

[Scott at MD Financial Services]

Look at the policy benefit to be paid out to you in the employer provided disability policy, if it is enough and you don't mind the negative things that are associated with group policies then you should be fine, otherwise augment it with an individual that you increase if you ever lose your group policy.  As for the WL, probably not a great idea for you.  In regards to term, you really don't have a 'need' but if you have a 'want' then go ahead and get it, those plans are inexpensive so not a big financial hit if you bought something you don't need.

Let me know if we can help further

[The White Coat Investor]

Yes, you probably ought to seriously consider an individual DI policy, even if in the end you decide to just go with what your employer offers. I'm not hearing a reason to consider WL.

[Arkad]

Also remember that if you have a group policy and then want to get an individual policy, you may be limited in the amount you can get.  If you get the individual policy first, you do not have to decrease that amount.  The problem would be if you left the group and had developed some condition that would make increasing your individual policy difficult and then you would be left with a smaller benefit.