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I know I need LTD, but do I really?

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  • I know I need LTD, but do I really?

    I don't have any LTD right now but know I should.  I'm a 44y/o part time pediatrician and make a bit over $10k/month.  Have a small house, big mortgage (SF Bay Area), kids age 7 and 12, and a husband who's currently earning about the same.  I know I should have LTD insurance, and knock wood don't have any known health issues that would prevent me from getting it.  But I can also come up with excuses not to get it.

    For one, both my husband and I are earning below our income potential.  If we were both disabled we'd be screwed, but if it was just one of us the other could increase hours or move to a higher paying employer and make more.  Obviously that wouldn't be fun for whoever also had to help care for a disabled spouse, but we could avert financial disaster.

    For two, if I could no longer practice medicine but could do a desk job I'd probably want to go into some kind of public health or community advocacy work.  It'd be a big pay cut but again, it would keep us off the streets and I think I could find that work very satisfying.

    Lastly, being in about the lowest-paid medical specialty, I assume that if I really should get own-occupation LTD I don't need to worry about paying for specialty-specific.

    Are those just silly excuses, and I ought to start ponying up a couple of grand a year to protect myself and my family?  Or is there actually some sound reasoning there and I should sock that money away in retirement or the kids' college?


  • #2
    Whether you are in the lowest paid specialty or not, if you are each working because you need the money to meet your expenses and/or allow you to save for your children's college educations or fund for your retirement, you need disability insurance.

    However, keep in mind, that unless you are working at least 30 hours per week, only Principal will allow you to purchase an individual policy.

    Will it cost you thousands of dollars? It all depends upon your earned income, how the policy is structured and if any discounts are available.

    As for "Own-Occupation" the cost is not much more than a policy that protects only your income and not your medical specialty.

    Finally, your policy should include an increase option to allow you to purchase additional coverage, regardless of your health, should your income rose or you subsequently return to work on a full-time basis.

    You should also consider coverage for your husband.
    Lawrence B. Keller, CFP, CLU, ChFC, RHU, LUTCF


    • #3
      I think your argument of not needing LTD is better suited to why you don't need life insurance.  Your husband can likely take care of himself and your children without you (even if there are sacrifices), but if you don't die and can't work you will be dead weight and suck him down with you.  You cost way more alive and are much more likely to be disabled than die early.

      On the light side...maybe think of a situation where you are in a car wreck.  Have a spinal cord contusion, multiple fractures, other severe but survivable conditions but maybe it is going to take 6 months to a year to go through rehab, recover and get back to work.  Would you want your family to run out of money and have to move, change careers and lifestyle right when you were about to get back to work?

      Or consider it to be a permanent spinal cord injury...can your husband make enough to cover you indefinitely?

      I know I'm probably going a bit over the top but I think that these ridiculous situations are what we purchase insurance to guard against.

      I carry own occupation disability insurance (kicks in at 90 days) and a term life policy.  My wife is also a physician with identical earning potential to me.  I plan to carry both types of insurance until I feel that I can self insure because I do not want to become a burden to my wife, and I do not want her to have to make sacrifices in her practice of medicine to support me if I become disabled.


      • #4
        Look at the cost to you again.  Thousands? Ummm, probably not.

        Disability is important.  I don't think you should fool yourself into thinking you are immune.


        • #5
          Your arguments give a good reason to carry less disability insurance than you otherwise might, but I don't know that I'd feel comfortable without any at all if I were you.
          Helping those who wear the white coat get a fair shake on Wall Street since 2011


          • #6
            One could make an argument that as a pediatrician, an own occupation definition of disability isn't as critical like it is for a physician performing invasive procedures. If you became disabled and unable to practice pediatrics, it is less likely you would be able to go to work doing something else.

            In California, a number of plans have own occupation built into the base contract, but there are other plans (like Principal's) that do not. And as LBKCLU mentioned, Principal is the only carrier that will offer you individual coverage if you are working less than 30 hours per week.



            • #7
              Agree with Dicast.  Think about what you are really insuring against.


              • #8
                Imagine yourself not able to work, and ask yourself if you can live well enough on your spouse's income.

                Now imagine yourself not able to work and needing care, and ask yourself again if you can live well enough on your spouse's income.