Tell me about disability insurance

[Parliament 14593]

We are far more likely to be disabled by an accident than killed. Myself, I have never had insurance against disability.

 

Tell me what I need to know plz.

[C-Man 27779]

Timely -- this was on my Facebook feed today: https://www.metlife.com/voluntary-benefits/meaningful-conversations/?cid=s6ba7&utm_campaign=g_gm_4q18_mco&utm_term=ac&utm_medium=social&utm_content=content+link_1x1&utm_source=facebook&utm_id=s6ba7&WT.mc_id=s6ba7&dclid=CjkKEQjw6-_eBRCu4bX8zLDk4_sBEiQAUOuTXCRD-BHGB5QvCYfjn_LmltyKibBJVx7aALeLjo_PuNHw_wcB

[Reagan1k 3042]

It's expensive - Because you are more likely to use it, obviously.  Show me a type of insurance with low premiums and a high benefit and I'll show you a risk that is seldom/never experienced.  DI is the opposite.

Disability coverage is all about the definitions - Are you covering yourself for being disabled in any occupation (Any Occ) or your own occupation (Own Occ).

Own occupation is more expensive - any normally bought by/sold to professionals or white collar types - Think surgeon who can know longer operate.  Executive who can no longer manage.....

Any occupation coverage is basically like the governments SSDI you pay for in FICA payroll taxes (Social Security Disability Insurance).  You have to be unable to do just about any reasonable occupation or "substantial gainful activity".

Most LTD (Long Term Disability) group coverage you get through an employer is "any occupation" and the benefits are capped 60% of your pre-tax income and a ceiling of something like $5k/month.  If you are paying for the coverage out of pocket, then the benefits are not taxable, hence the discount taking the benefit down to somewhere close to but not quite equal to your after-tax income.

If you are self employed or work for an employer who does not provide it, you can also buy a personal policy "Any Occ" policy but you have to shop for a carrier who will write it based on your personal situation, type of employment, and income levels.

You can go out on the market and buy a personal "Any Occ" policy and tailor it to meet your needs and cover your income up to a similar discounted level for whatever income you can demonstrate through financial records.

You'll have elimination periods and benefit periods - Elimination periods are the period of time you can't work before benefits start and benefit period is how long they are paid.

So, you can have a policy with a 6 month elimination period and 5 year benefit period.  It would be cheaper than a policy with a 90 day elimination period and benefits to age 65 for instance.

It can be complicated but is pretty important, especially in a one-income household.