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  • Disability Insurance

    Hey all,

     

    I applied for for disability insurance towards the end of residency, unfortunately the initial price I was quoted was declined by the carrier due to a prior, resolved illness. My broker said that they would continue working to get insurance for me, but I suspect that the price will be much higher than what I was initially quoted. At what price point, if any, would it make sense to forgo purchasing disability insurance, and perhaps using that money for other purposes (savings, investing, etc.) Appreciate any advice!

  • #2
    When I was applying for disability insurance, I was undergoing treatment (terrible timing). The issue is resolved and is documented in the medical record as such, but the etiology of the illness is unknown which I suspect is why the carrier rejected my application. I let my broker know that the issue has since resolved and he told me that he would forward this information to the carrier.

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    • #3
      Also the broker is independent, fwiw

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      • #4
        Terp,

        Disability insurance is very expensive, even for healthy people. My husband applied right out of residency but it was not cheap.

        When  I think of the amount of money we have spent on it, (when it could have been invested), I shudder. To answer your question, I think it's more about the peace of mind disability affords a person. Ideally you would want to have the disability insurance as well as putting away additional monies for your retirement. Also, remember you don't have to have a policy that matches exactly what your monthly income would be. Decide how much you need to live on for a monthly basis. Have your budget in front on you.  Then ask your broker how much the corresponding rate would be for that yearly amount of money.

         

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        • #5
          Personal decision but I consider DI to be pretty important, it's insurance for your most valuable asset: your income.  Run the numbers and see how the extra in premiums will affect your ability to save and/or spend and decide whether it's worth it to you.  Right now my premiums are 2.5% of the benefit amount, however I'd consider going up to 5% or more if that was my only option, however I consider myself to be relatively cautious and risk averse.

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          • #6
            Thanks for the responses! I was initially quoted $75/mo for $2500/mo policy, and was worried the next offer would skyrocket. I'll wait to see what my broker comes up with

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            • #7
              A general rule of thumb is $30 per month per $1,000 of benefit while you are in residency for a fixed rate and $20 per month per $1,000 of benefit for a graded (increasing)
              Scott Nelson-Archer, CLU, ChFC
              303-953-0263 Direct / [email protected]

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              • #8
                IMO at the base price point it is already too expensive.

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                • #9
                  Talk to a high earning physician who has been disabled and did not have a policy or one that covered too small a portion of their income.  It is pretty horrific.  If you die without good life insurance, you will never think about it.  If you get disabled and are not covered, you will be around to regret your decision.

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                  • #10
                    I'll regret a lifetime of premiums paid if I never collect.   :P

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                    • #11
                      A quick update: told that I would not be considered for policies until a year after my initial application so will be reapplying next year. I guess I saved a year of premiums *shrug*

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                      • #12




                        A quick update: told that I would not be considered for policies until a year after my initial application so will be reapplying next year. I guess I saved a year of premiums *shrug*
                        Click to expand...


                        Did your agent shop around with other companies? Different carriers often treat the same condition differently.

                        Also, make sure your policy has own-occupation coverage and a favorable partial/residual disability benefit.

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