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Disability Insurance sanity check

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  • Disability Insurance sanity check

    My residency program sponsored some disability insurance brokers to come talk to us around the last year of residency. I eventually purchased a plan through these brokers with Guardian. During that time these brokers told me the could check with other insurance providers, but that since Guardian was "the best" and had the best coverage they ended up only checking with Guardian (which I guess maybe should have set off some alarms but didn't). Over the next few years as I got an attending salary I increased my disability coverage through them.

    Now I'm wondering if I'm paying way too much for disability insurance since it seems like more than some other doctor friends are paying, though there's some differences (different specialties and gender etc).

    I'm currently 34 years old and healthy, with a policy I purchased when I was 28 years old with some future increase riders that have been exercised.
    I'm female.
    I'm an Anesthesiologist.

    Total Benefit: ~14,600
    Total Annual Premium: ~8,800
    Benefit period: To age 65
    Elimination: 90
    There's an Enhanced Partial Disability Rider which appears to be ~1500 of the annual premium

    This seems to be more than twice as expensive as I've seen other disability insurance be, though no one I've spoken to has had own-specialty insurance for anesthesia as a woman. I'm trying to get a sense if whether this is a reasonable amount to be paying (it's almost as much as my rent and my second highest category of monthly spending) or if I should be shopping again for cheaper disability insurance.

  • #2
    The short answer is that I have no idea if you could have done better 6 years ago but that doesn't seem crazy high to me. I'm a male anesthesiologist who bought policies at ages 31 and 34. The policy I got at age 34 has a monthly benefit of $7800 for an annual premium of ~3600. The older policy was a weaker contract but $3500 monthly benefit for ~1650 premium. If I applied the average of my benefit/premium ratios to your benefit it would be an annual premium around 6800. I don't know at what ages you exercised your FIO, but your "pink premium" is roughly 33% compared to me, which is well within ranges quoted online.

    Having said all that, you will sleep better if you just shop around and see what you can get. Absent a time machine the best thing to do today is find a good broker who can offer a volume discount based on having lots of clients at your employer. Have them run a scenario of replacing 50-60% of your guardian policy with policies from other (reputable) insurers. I personally would be reluctant to replace everything because you are past the point where just about anything that comes up could be construed as a pre-existing condition. If, on the other hand, you replaced the entire thing with another company to save $1000/year and had some illness in the next year, the claim could have more scrutiny because you're in the 2-year look-back period.

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    • #3
      Disability insurance is driven largely by age, gender, medical specialty, state you live in and then discounts. After that is just a matter of benefit load and features you want/have. Do to the fact that Guardian has a graded premium structure as an option, you need to know if that is present on your policy as well. At $50 per month per $1,000 of benefit you certainly don't have a super efficient policy but unless you go through a re-quote process where you look at all of the carriers and exactly what is in your policy then it would be hard to say do you have a good deal or what can be done to create some premium relief.
      Scott Nelson-Archer, CLU, ChFC
      281-770-8080 Direct / [email protected]

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      • #4
        I did initially start with a graded premium structure but then moved it to flat a few years ago. There's no further increases on premiums at this point. The policy was purchased in MA but I now work and live in CA, I wasn't aware there were state-based issues at all. Do I need to worry about updating my agent about moving between states and ending up with different coverage between states? Ultimately I intend to be self-insured relatively soon so as long as this policy is within the realm of reason I may end up just sticking with it for now. Going through a re-quote process sounds like a lot of additional headache.

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        • #5
          Yes the state you live in at issue and sometimes the state you live in at the time of increases do make a difference on designs, features and prices. It does take some effort on your part to go through a re-quote, no doubt about that but it is the only way your going to find out if you have a good deal. Yes you should let the agent and company know you moved so they can update your address for notifications.
          Scott Nelson-Archer, CLU, ChFC
          281-770-8080 Direct / [email protected]

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