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Message
Disability Insurance--how much to get and other questions within
Posted on 4/1/13 at 4:58 pm
Posted on 4/1/13 at 4:58 pm
What percentage of income should I get as a benefit and is 2% of annual income too large a premium?
My current benefit is approximately 50% of monthly income. I figure if I'm disabled, I won't be spending money on all the fun shite I usually do
My current benefit is approximately 50% of monthly income. I figure if I'm disabled, I won't be spending money on all the fun shite I usually do
6
Posted on 4/1/13 at 9:49 pm to Motorboat
Disabled is a relative term. There is disabled as in not being able to work, and there is disabled as in not being able to perform the specific job that you are trained or educated to do.
The policies reflect this as well. The answer really depends on your profession, life style expectations, and necessary net income to reasonably maintain that standard of living. This is not a one size fits all question.
The policies reflect this as well. The answer really depends on your profession, life style expectations, and necessary net income to reasonably maintain that standard of living. This is not a one size fits all question.
Posted on 4/1/13 at 11:13 pm to Motorboat
If you pay for it then it's a tax free benefit to you if you go on claim. If the company pays for it as a "benefit," then you'll be taxed on the benefit if you go on claim.
Let's say someone makes $100k and is covered at 60% of group DI that the company provides. You would think they would receive $60k each year. What really happens is after tax on that $60k "benefit" turns into more or less $40-$45k when it's all said and done.
Most companies also won't pay the full benefit until you have been denied by Social Security at least 3 times. That could almost take up to 2 years because of the time frame and windows they have for each application.
Statistically your more likely to become disabled than die prematurely.
Let's say someone makes $100k and is covered at 60% of group DI that the company provides. You would think they would receive $60k each year. What really happens is after tax on that $60k "benefit" turns into more or less $40-$45k when it's all said and done.
Most companies also won't pay the full benefit until you have been denied by Social Security at least 3 times. That could almost take up to 2 years because of the time frame and windows they have for each application.
Statistically your more likely to become disabled than die prematurely.
This post was edited on 4/1/13 at 11:17 pm
Posted on 4/2/13 at 7:48 am to Motorboat
You should want 100% of your income to still come into your household if you are disabled.
A combination of private and group coverage could get you there.
Remember, social security diability payments will coordinate it's benefit with your company provided disability payments. Read your coverage outline.
A combination of private and group coverage could get you there.
Remember, social security diability payments will coordinate it's benefit with your company provided disability payments. Read your coverage outline.
Posted on 4/2/13 at 12:20 pm to BestBanker
You can never get 100% off your income. Govt won't allow it. 70% or so is the max. You absolutely want it and as much of it add possible if your needs for it are there. Sure if you get disabled you won't be doing "fun shite", but you will be paying more in medical bills. Expenses will go up. The key is to go with a highly rated company and go with someone who can educate you about it
Posted on 4/2/13 at 12:29 pm to Motorboat
Also, when looking at disability insurance, make sure you know exactly how each company defines disability, both total and partial.
Posted on 4/2/13 at 12:44 pm to Motorboat
Looks like you've gotten most ofthe info you need already.
As for the cost, what percentage of your income do you pay for your homeowners insurance and auto insurance? Neither of those assets even come into the ballpark in regards to value, as your ability to earn income. Look at a benefits paid summary if you would get disabled tomorrow, then ask yourself if 2% of annual salary to protect that amount of future earnings is too much. My guess would be no.
As for the cost, what percentage of your income do you pay for your homeowners insurance and auto insurance? Neither of those assets even come into the ballpark in regards to value, as your ability to earn income. Look at a benefits paid summary if you would get disabled tomorrow, then ask yourself if 2% of annual salary to protect that amount of future earnings is too much. My guess would be no.
Posted on 4/2/13 at 10:27 pm to bbrou33
quote:
You can never get 100% off your income. Govt won't allow it.
So tell me when the government started regulating how much private DI I can purchase?
Thanks.
Posted on 4/2/13 at 10:30 pm to BestBanker
for a while 
You can't get 100% of your income in disability.
You can't get 100% of your income in disability.
Posted on 4/2/13 at 10:36 pm to GoCrazyAuburn
Sorry to disappoint. I've got it. Eta: sorry. Hit the button to fast. Max private DI then add group offering.
Also include any waiver on WL policies.
Also include any waiver on WL policies.
This post was edited on 4/2/13 at 10:40 pm
Posted on 4/2/13 at 10:46 pm to BestBanker
quote:
Also include any waiver on WL policies
not disability coverage.
Did you have the group coverage when you applied for the private disability?
Posted on 4/2/13 at 10:56 pm to GoCrazyAuburn
No.
120%.
And I do include waiver in my overall equation. My policies are old.
120%.
And I do include waiver in my overall equation. My policies are old.
Posted on 4/3/13 at 5:31 am to Motorboat
quote:
My current benefit is approximately 50% of monthly income. I figure if I'm disabled, I won't be spending money on all the fun shite I usually do
Problem will be having to pay for health insurance and out of pocket expence which will blow thru that 50% fast each month. Thank God I had it. Thought I would never use it, but I am. Been on it for two 1/2 years and will be for the rest of my life. I will be turnning 55 this month and will collect it till I'm 70 years old. I get 66% of my base pay each month with no cost of living to it. Also, SSD is base of how much you pay into it. I was maxing out on that the last 10 years and I get the max from them. Around $2300 a month.
Posted on 4/3/13 at 8:59 am to BestBanker
Did you disclose your individual coverage when applying for group?
Posted on 4/3/13 at 11:44 am to GoCrazyAuburn
quote:
Did you disclose your individual coverage when applying for group?
To whom would I have had disclose this information to at the time of the group application, and where would that line of questioning be on a group application where every employee is granted such benefit?
You may be confusing the personal/individual application with a group policy application. The individual application for coverage does ask the applicant if they have any group inforce coverage and if they anticipate receiving or even having an opportunity to apply for group coverage in a 12 month window.
Posted on 4/3/13 at 12:22 pm to BestBanker
Most groups are suppose to ask that as well.
If get didn't then that is on them, but what happens in situations like this, the insurance company will more than likely find out you are double dipping on coverage, and if you look in the details on the contracts, they reserve the right to get funds for your from overpayments. The group coverage could have legal standing to sue as well IF they did ask about other coverages (not saying they did). So, just be prepared for that if you ever do become disabled, because the insurance companies and IRS are not going to allow you to receive 100%+ in benefits.
If get didn't then that is on them, but what happens in situations like this, the insurance company will more than likely find out you are double dipping on coverage, and if you look in the details on the contracts, they reserve the right to get funds for your from overpayments. The group coverage could have legal standing to sue as well IF they did ask about other coverages (not saying they did). So, just be prepared for that if you ever do become disabled, because the insurance companies and IRS are not going to allow you to receive 100%+ in benefits.
Posted on 4/3/13 at 12:32 pm to GoCrazyAuburn
Hate to tell you that you're wrong, but you are so wrong here (unless the state you reside has particular insurance law that contradicts).
And, if you can get a copy of a group plan outline, it will say that one of the areas that does not coordinate with group DI payment is an individual policy payment. I just read one last night out of Florida.
eta:
Nope to both.
Where in the group application is the question relating to personal individual coverage in the employer application paperwork?
Group coverage only coordinates with government sponsored benefits (Ex. SSI). Now then, the government may not want to pay you a social security disability benefit if you have enough private DI coverage, but that is not in any law I am aware. I do know that the group DI benefit IS reduced by what someone would receive from SSI. This little unknown-to-many fact needs to be known by everyone.
And, if you can get a copy of a group plan outline, it will say that one of the areas that does not coordinate with group DI payment is an individual policy payment. I just read one last night out of Florida.
eta:
quote:
The group coverage could have legal standing to sue as well IF they did ask about other coverages (not saying they did). So, just be prepared for that if you ever do become disabled, because the insurance companies and IRS are not going to allow you to receive 100%+ in benefits.
Nope to both.
Where in the group application is the question relating to personal individual coverage in the employer application paperwork?
Group coverage only coordinates with government sponsored benefits (Ex. SSI). Now then, the government may not want to pay you a social security disability benefit if you have enough private DI coverage, but that is not in any law I am aware. I do know that the group DI benefit IS reduced by what someone would receive from SSI. This little unknown-to-many fact needs to be known by everyone.
This post was edited on 4/3/13 at 12:40 pm
Posted on 4/3/13 at 1:03 pm to BestBanker
Well, maybe I am mistaken, but I have seen the situation before where the insurance company has sued the client for overpaying of benefits. If I am, then I will bow out and defer to your knowledge. Good point on the group benefits and SISB (social security benefits), most surprisingly don't know that. Also of note is that your group benefits are more than likely taxable, but I assume you know that already.
Though to the OP's question, it is impossible to get underwritten for 100% of income. No insurance company will do that.
Though to the OP's question, it is impossible to get underwritten for 100% of income. No insurance company will do that.
This post was edited on 4/3/13 at 1:06 pm
Posted on 4/3/13 at 1:09 pm to GoCrazyAuburn
quote:
Also of note is that your group benefits are more than likely taxable
THIS IN A BIG WAY!
You know, most people who get this type of benefit from their employer don't know this. That is a great thing you put there! If the employer pays the premium, the benefit is 100% income taxable.
Posted on 4/3/13 at 1:13 pm to BestBanker
Yep. I don't think I've ever had a client that knows their group disability is taxable. That 60% is really more like 40-45%. They hear that and just sink.
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