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Started By
Message
Long-Term Disability: How much do I need?
Posted on 11/15/11 at 9:19 pm
Posted on 11/15/11 at 9:19 pm
Are there any good rules of thumb?
I'm currently married, no kids. My company automatically gives me 40% of pay up to IRS Limit without me having to pay anything in. I can increase that to 50% or 60% within my benefit plan by contributing a little, but I don't know if I need to. I also don't know how long that 40% of pay applies for, nor what it covers.
For instance, my understanding is that if I go skiing and run into a tree and paralyze myself such that I can't work, I'll get 40% of my current pay for some time (don't know how long...rest of my life?).
1. Is this 40% enough? Will it be enough when I have kids? (Obviously none of you will know this...I guess I'm asking if there are any rules of thumb that I could apply based upon my marital/dependant situation)
2. How long does it pay for?
3. Under what circumstances would I have to get disabled for it to NOT apply?
I've really never even considered LTD, but after reading recently about how critical it is, I want to make sure I'm covered.
Am I good, or do I need to go outside of my companies benefit plan to get coverage?
I'm currently married, no kids. My company automatically gives me 40% of pay up to IRS Limit without me having to pay anything in. I can increase that to 50% or 60% within my benefit plan by contributing a little, but I don't know if I need to. I also don't know how long that 40% of pay applies for, nor what it covers.
For instance, my understanding is that if I go skiing and run into a tree and paralyze myself such that I can't work, I'll get 40% of my current pay for some time (don't know how long...rest of my life?).
1. Is this 40% enough? Will it be enough when I have kids? (Obviously none of you will know this...I guess I'm asking if there are any rules of thumb that I could apply based upon my marital/dependant situation)
2. How long does it pay for?
3. Under what circumstances would I have to get disabled for it to NOT apply?
I've really never even considered LTD, but after reading recently about how critical it is, I want to make sure I'm covered.
Am I good, or do I need to go outside of my companies benefit plan to get coverage?
This post was edited on 11/15/11 at 9:22 pm
4
Posted on 11/15/11 at 11:21 pm to Luke4LSU
I honestly don't know. Oweo may be better qualified to discuss this, or may not be, I don't know the details of his situation. And there are probably a couple of other posters who might chime in.
At any rate, in this area I have tended to err on the side of caution by buying extra insurance.
At any rate, in this area I have tended to err on the side of caution by buying extra insurance.
Posted on 11/16/11 at 6:21 am to foshizzle
quote:
Oweo may be better qualified to discuss this
Posted on 11/16/11 at 9:06 am to Luke4LSU
I suppose it depends on how much you make...
40% of 120k might be enough to live off of.
I have 100k of LDT coverage till age 72. Gives me some peace of mind.
40% of 120k might be enough to live off of.
I have 100k of LDT coverage till age 72. Gives me some peace of mind.
Posted on 11/16/11 at 9:25 am to Luke4LSU
I just read through a friend's Disability plan through Chevron and it seems like it might be similar to yours. His is 40% short term disability that is automatically paid for by the company. He can buy up to 60% for long term.
im thinking that 40% your company is offering you is short term also. Read through your company's group plan to find out how long/what the short term will cover.
Look at it this way. If you get disabled, will that 40% be able to pay for your mortgage or whatever fixed expenses you have currently?
Personally, I think 40% is not enough.
im thinking that 40% your company is offering you is short term also. Read through your company's group plan to find out how long/what the short term will cover.
Look at it this way. If you get disabled, will that 40% be able to pay for your mortgage or whatever fixed expenses you have currently?
Personally, I think 40% is not enough.
Posted on 11/16/11 at 10:31 am to TortiousTiger
and for reference, this costs me about $90/mo
Posted on 11/16/11 at 2:41 pm to Luke4LSU
First thing. If the company is paying for the coverage, more than likely that benefit will be taxed once it comes to you. So is that 40% after tax or pre-tax?
Second think about expenses if you become disabled. They don't go away just because you aren't going to work. They only go up. You still have mortgage, living expenses, still storing away for a comfortable retirement, and now add on medical expenses. Will 40% be enough to cover all of that? More than likely no it won't be.
You're questions 2 and 3 can't be answered without looking through the definitions or your company's policy.
LTD policies should begin payments about 3 months after your disability. Benefits should last until age 65 or 70.
A good policy will state that you are totally disabled when not able to perform the duties of your regular occupation.
In your situation I would def keep the group policy. Nothing wrong with receiving a free benefit. But on top of that I would get an individual policy to supplement the difference between what you will receive from the company and that 60-70% of your income mark.
Think about it. What is your most important asset? You're income. So why not put a plan in place to make sure it's protected.
Second think about expenses if you become disabled. They don't go away just because you aren't going to work. They only go up. You still have mortgage, living expenses, still storing away for a comfortable retirement, and now add on medical expenses. Will 40% be enough to cover all of that? More than likely no it won't be.
You're questions 2 and 3 can't be answered without looking through the definitions or your company's policy.
LTD policies should begin payments about 3 months after your disability. Benefits should last until age 65 or 70.
A good policy will state that you are totally disabled when not able to perform the duties of your regular occupation.
In your situation I would def keep the group policy. Nothing wrong with receiving a free benefit. But on top of that I would get an individual policy to supplement the difference between what you will receive from the company and that 60-70% of your income mark.
Think about it. What is your most important asset? You're income. So why not put a plan in place to make sure it's protected.
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