My wife currently pays for LTD with after tax money. I am looking at her HR benefits and she could get coverage through her employer with pre-tax payments.

If I am doing the formula correctly, she would pay roughly $60/month pre-tax to cover her salary.

She currently pays $240.50/month.

I don't think they are completely apples to apples since the post-tax plan has a 3% COLA rider in it.

Is their an advantage to pre vs post tax payments. I get the general principle that taxes are already paid. We don't plan on having more kids, so our biggest LTD risk is down. Would it be worth going pre-tax and investing that money elsewhere? Just curious to hear some thoughts.

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Posted by UpstairsComputer

Prairieville

Member since Jan 2017

1799 posts

Posted on 11/2/23 at 11:23 am to TheWiz

You're insuring a risk, not trying to make money. If you view that risk of having 20-25% less income (just guessing here) as acceptable vs. $2,200/yr while that income is rolling in, that's your decision.

I would always take the after tax because it'll last until you're 65 in most cases regardless of when she actually plans to retire - massively skewing the payout in your favor assuming she's retiring earlier than that.

There's a bunch of other factors to consider but you didn't provide that context on the policy, age, income, etc.

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Posted by TheWiz

Third World, LA

Member since Aug 2007

11865 posts

Posted on 11/3/23 at 10:39 am to UpstairsComputer

Not sure what else to provide but it sounds like after tax is the ticket.

Base Policy is for $8,100. Guess we haven't updated since last promotion.
Rider: Enhanced Residual Disability Rider
Cost of living adjustment rider 3%

She's 38. Makes almost $190,000. Low risk occupation. No plans to have more kids.

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