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Disability Confusion

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  • Disability Confusion

    Long story not so short.  Looking to get a supplemental LTD for spouse, a physician, and member of a medical association in spouse's discipline.  Spouse's employer, as part of benefit package, provides group LTD, up to 60% of income.  Association also has a personal group SLTD benefit that provides up to 75% when combined with other LTD income (such as employer's).


    So, being new to purchasing SLTD insurance,  I had questions and called the administrative group that manages association's group SLTD.  I was immediately super disappointed when the agent tried to tell me that ALL LTD benefits (or any income for that matter) are taxable by the US government.  He tells me this when I CLEARLY told him it was a personal policy paid with after tax dollars, which I already knew was non-taxable.

    So, a week later I moved on to a different agent.  I asked for advice and was assured I woudl be taken care of.  The FIRST thing he sends me is a quote from a DIFFERENT carrier not contracted with the association.  Already I was surprised and smelled something fishy.  right off the bat I could see that the premiums were outrageous compared to assoc premiums.  Honestly, it might be just me, but I felt like I was being taken advantage of.  Like sharks smelling blood in water.  Subsequent questions seemed to be answered with how inferior the association's policy was.  I really felt this agent was out for a greater commission rather than being an honest representative for the association's SLTD program. So, batting 0 for 2 and not so happy.

    That said,  lets compare the association and non-association SLTDs.  Max benefit of non-assoc is 81%.  That's 6% more! In our case just about $800 difference a month.  Premiums are $190 a month.  The association's premiums are $32 a month.  Non-assoc is non-cancellable and guaranteed renewable with COLA and Future increase option riders (there's some other stuff too).  I don't know id the association's SLTD has either as it isn't 100% clear to me as of yet.  The association's premium is variable and goes up every five years.  However, over a 25 year period I estimate total premiums paid to be $20,00 with association's SLTD and $50,000 with non-association's SLTD.

    Now I am in a position where I feel I cannot ask agent questions as I will get a spun answer.  I also must assume that this VERY large association that covers a huge discipline in the medical field in all of USA and Canada would not offer garbage SLTD policies to their members.  How can I ask questions and effectively compare policies with answers in "layman's terms" and feel comfortable I am getting honest answers?  Further, with what little information I have, what seems the best way to go regarding the two policies?  Honestly, I am not excited about the nearly $200 premium so early in spouses career and am genuinely confused at this point.

    Thanks for any input you may have.  If more detail on policies are necessary, ask and I will provide.

    Thank you all so much.

  • #2
    I will reply to my own post.   I just stumbled across this.  Ai yai yaiiieee!  Really?  Sigh!  Any input is still welcome but this article makes things look not so rosie.





    • #3
      There is also a part two to that post which discusses how the premium rates compare over one's career. I also reviewed some other association policies in the comments section. If the association plan you are looking at is not there, I can add it for the benefit of other readers.

      If you want me to review the plan(s) that you are considering, feel free to scan and email them to me at [email protected] I can then give you the pros and cons of each and possibly make other recommendations to you.
      Lawrence B. Keller, CFP, CLU, ChFC, RHU, LUTCF


      • #4
        Thank you so much.  I will get in touch soon.