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Advice on purchasing a new disability insurance policy

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  • Advice on purchasing a new disability insurance policy

    My wife bought a disability insurance policy a few years ago while a resident (underwritten by Metlife). When she became an attending, she contacted our agent and asked him to put in the paperwork to increase the benefit. Her policy had a maximum of $17.25k/month, and she is now making a dermatologist's salary, so we figured it would increase to the maximum. We found out, however, that she was only capable of increasing to $13.5k/month. My wife's share of our monthly spending is about $12K, but her share of our retirement savings is $4.5k, meaning we really need to replace $16.5k/month if she becomes disabled.

    We have started looking around at new policies. We have obtained quotes from two different agencies recommended here, and have found that about $13k/month benefit is all she can qualify for now. However, the rates for the new quotes are significantly less than her current policy, meaning that it makes sense for her to buy a new policy. We still need to find a way to insure the full $16.5k/month, though. Most of the policies offer the chance to increase the benefit as her pay increases, but she is not completely sure her pay will increase, at least not for several years. Also, if she were to become disabled today, she would need more than she would later on, as we are currently paying off her school loans (although now that I write this, I realize that Laurel Road, with whom she refinanced, will forgive the loan if she becomes disabled; that brings her share of our monthly budget to 15k/month). Nevertheless, later on in her career, we will likely need less, as we get closer to financial independence.

    So, for the new policies, we have a couple of different options: one policy comes with a Future Benefit Increase Rider which allows her to increase the policy's monthly benefit by 4-10% a year, based upon changes in the Consumer Price Index for Urban Workers (CPI-U), for the first 6 years that she owns the policy. If she bought this policy, after 6 years, her benefit would be somewhere between $16,449.15 and $23,030.29, which would obviously cover our monthly expenses. It wouldn't immediately cover our costs, but would be where we needed it in a few years, and wouldn't require that my wife's income increase significantly.

    The other option presented to us was to get a Student Loan Rider added to the policy for 10 years, but it would only pay the loans, and as I noted above, they would be forgiven anyway.

    So, we are leaning toward getting the policy with the Future Benefit Increase Rider. Is there anything I'm missing about all of this? Is there a better way to get more coverage now?

    Thanks in advance!