Disability insurance question

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
bogleboyz
Posts: 64
Joined: Sat May 21, 2016 2:30 am

Disability insurance question

Post by bogleboyz » Sun Dec 18, 2016 4:00 am

I am 37 years old currently with no medical problems
I currently have a metlife disability policy for $5,000 monthly benefit (omni advantage) with elimination period of 180 days. I am paying about $2,080 per year
It has the following riders
lifetime benefit for total disability (no charge)
monthly benefit for residual disability with 24 m recovery benefit ($312)
presumptive disability (no charge)
your occupation benefit ($319)
Guaranteed insurability ($96.3)
max total increase $5000
unit of increase $1000


i recently got an offer from another agent for ameritas policy for the same $5,000 benefit for a premium of $1521 per year.
it has all the base policy features along with the enhanced residual disability rider and recovery benefit rider

The agent said that the premium is lower because ameritas gives a discount to my employer.
Considering the savings of $559 in premium per year, do you think i should switch?

The metlife policy offers lifetime benefit for total disability if it starts before the age of 45. The benefit amount progressively decreases 5% each year after age 45. e.g if disability starts at age 46, the benefit will be 95% of the $5,000, if disability starts at age 47, the benefit will be 90% of the $5.000 and so on. The ameritas policy does not have the lifetime benefit.

Also the metlife policy offers full coverage for claims related to mental/nervous and/or substance abuse disorders. The ameritas policy limits these benefits to 2 years for mental/nervous and/or substance abuse disorders

if i switch i will lose the lifetime benefit. I am not too concerned about the mental/nervous disorders as i have no history of addiction or mental health issues.

I am having a hard time deciding whether i should switch to save the $559 in premium per year although i lose some benefits also
I would appreciate any advice

User avatar
simplesimon
Posts: 3000
Joined: Mon Feb 25, 2008 8:53 pm
Location: Boston, MA

Re: Disability insurance question

Post by simplesimon » Sun Dec 18, 2016 7:37 am

How does the lifetime/decreasing benefit compare to your savings and retirement progression?

I assume you get to keep the lower premium if you switch employers?

User avatar
dm200
Posts: 13785
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: Disability insurance question

Post by dm200 » Sun Dec 18, 2016 8:15 am

In general, I would lean away from optional insurance that is tied to my current employer. Things (for a lot of reasons) can change quickly. Even things like mergers can adversely affect things like this.

bogleboyz
Posts: 64
Joined: Sat May 21, 2016 2:30 am

Re: Disability insurance question

Post by bogleboyz » Sun Dec 18, 2016 1:36 pm

dm200 wrote:In general, I would lean away from optional insurance that is tied to my current employer. Things (for a lot of reasons) can change quickly. Even things like mergers can adversely affect things like this.


the new disability policy would be personal and not tied to my employer. I just get a discounted premium which costs $500 less as compared to my current policy

John Laurens
Posts: 253
Joined: Mon Nov 14, 2016 7:31 pm

Re: Disability insurance question

Post by John Laurens » Sun Dec 18, 2016 1:45 pm

If you are going to shop, then you might as well shop lots of carriers. Guardian, Ohio National, Principal, Ameritas. I just received an Ohio National LTD that came with a 10% premium reduction if I bought term life insurance as well. After one year I can drop the term life but keep the 10% discount forever.

Regards,

John

Kencufc
Posts: 128
Joined: Sat Jul 30, 2016 9:36 am

Re: Disability insurance question

Post by Kencufc » Sun Dec 18, 2016 11:52 pm

I just did the same thing through Ohio National. Find an independent agent and find the best rates from all companies.

BruDude
Posts: 2612
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Disability insurance question

Post by BruDude » Mon Dec 19, 2016 12:11 am

Kencufc wrote:I just did the same thing through Ohio National. Find an independent agent and find the best rates from all companies.


Ohio National's new DI product is very competitive on both pricing and benefits. They have come a long way and are a great company all-around with very fast underwriting/approval. Out of all the insurance companies I sell for (which is a lot), Ohio National has by far the best agent and customer support team. A few years ago, they wouldn't even let us sell a DI policy if it wasn't done face-to-face and their rates were always way higher than other companies.

OP - depends what you value most in the policy. The graded lifetime benefit on your policy is probably way underpriced compared to today's rates. However, the 24-month recovery benefit on the residual rider is not good. The Ameritas policy should have a recovery benefit for the entire benefit period, assuming it is a regular individual policy and not a voluntary group policy. $559/year x 30 years = $16,770, not a small chunk of change when the benefits are really pretty comparable overall.

bogleboyz
Posts: 64
Joined: Sat May 21, 2016 2:30 am

Re: Disability insurance question

Post by bogleboyz » Mon Dec 19, 2016 12:44 am

simplesimon wrote:How does the lifetime/decreasing benefit compare to your savings and retirement progression?

I assume you get to keep the lower premium if you switch employers?



my savings and retirement accounts should continue to build as we have a high savings rate.
yes i keep the lower premium if i switch employers

bogleboyz
Posts: 64
Joined: Sat May 21, 2016 2:30 am

Re: Disability insurance question

Post by bogleboyz » Mon Dec 19, 2016 1:00 am

John Laurens wrote:If you are going to shop, then you might as well shop lots of carriers. Guardian, Ohio National, Principal, Ameritas. I just received an Ohio National LTD that came with a 10% premium reduction if I bought term life insurance as well. After one year I can drop the term life but keep the 10% discount forever.

Regards,

John


the agent looked at all the companies and the premium for ameritas was lowest. The other carriers were comparable to my current metlife policy premium

Post Reply